Shoprite opts for joint venture

To divest some real estate to help balance sheet

Shoprite will transfer its distribution centres and undeveloped land valued at R2 billion to a new joint venture it is creating with Equities Property Fund, the supermarket chain said yesterday.

Shoprite has more than 2 800 stores across Africa and has said it wants to divest some land to help its balance sheet.

Shoprite Checkers will contribute a portfolio of distribution centres and associated undeveloped land in Brackenfell in the Western Cape and Centurion in Gauteng into the joint venture.

Equities will inject cash of R2.1 billion in exchange for a 50.1% equity stake in the joint venture, the retailer said.

Thereafter, the joint venture will acquire Shoprite’s Cilmor distribution centre in Cape Town and associated undeveloped land for cash of R1.2 billion.

“The joint venture company will manage the portfolio and it will serve as a platform for the future development of the undeveloped land situated at Cilmor and Centurion and for possible future property acquisition and development opportunities,” Shoprite said.

Separately, Shoprite said diluted headline earnings per share fell by 2.6% to 372.4 cents in the 26 weeks ended December 29 from 382.4 cents a year earlier.

Earnings fell short of the 463 cents per share expected by analysts, Refinitiv Eikon data showed.

The retailer said it was battling with currency devaluations in Angola, Zambia and Nigeria. Store closures in Nigeria and reduction in customer count, both during and after the September attacks on foreigners, “resulted in a difficult half with sales declining by 8.1% in constant currency terms”. In September, Shoprite and MTN closed stores in Nigeria in the face of attacks targeting their premises in retaliation for similar violence inSouth Africa.

Sales in rand terms in the group’s international operations, comprising 14 African countries, fell by 3.1%. In constant currency terms, sales rose 4.8%. Trading profit at its African operations plunged 62.3% on a R68 million fall in interest income earned on government bonds and bills. This was mainly due to Angola Treasury Bills that reached maturity during the reporting period, it added.

Overall, group sales rose 7% to R81.2 billion. The group’s core business, Supermarkets South Africa, was the star performer. Sales rose by 9.8% on an overall basis and 6.6% on a like-for-like basis, boosted by liquor sales and its strategy to grow its share of spend in the mid to upper segment of the market under its Checkers brand.