Shoprite defies challenging market conditions
Africa’s largest retailer with a customer base of more than 35 million people across the continent, Shoprite Group announced an investor-pleasing set of annual results on Tuesday, adding thousands of jobs, increasing sales and profit, and staving off food inflation, despite having to deal with a pressurised consumer environment.
Shoprite grew its trading profit by 11,6% to R8 billion for the 2017 financial year, defying tough market conditions and its South African supermarket operation, which represents 72% of total sales and 79% of trading profit, grew sales by 8% to R101 734 billion, or 10,5%. Turnover was up by 8,4% to R141 billion, while earnings before interest, tax, depreciation, and amortisation increased by 6,8% to R10 billion.
Diluted headline earnings per share shot up 11,9% to 1 007,4 cents. Shoprite declared a dividend of 504 cents per ordinary share, up 11,5% on the 452 cents of 2016. It was 64th consecutive quarter of like for like sales growth for the retail giant.
"The group made progress on all our strategic priorities, which included strengthening our private label products, franchise offer and footprint expansion and we had over one billion transactions in total," said CEO Pieter Engelbrecht.
"Against a disconcerting South African unemployment figure of 27%, we are proud of the 6 027 jobs we created, most of which are filled by youth. Our total staff complement rose to 143 802 employees, making our group the largest South African employer in the private sector."
Trading outside South Africa remained robust, despite exchange concerns as the rand strengthened against many other African currencies. The group opened 51 new stores beyond South African borders and will open the doors to its 1 001st supermarket in the country on Wednesday.
Engelbrecht said the chain held internal food inflation in check at an average 5.9% compared with official food inflation of 10%.
The only real dampener on an otherwise triumphant day for the group was rising security costs.
"Security costs are still showing double-digit growth due to the group having to spend more to protect customers and stores from the scourge of burglaries and armed robberies, which are on the increase, especially during month-ends and grant payouts," Engelbrecht said.
Shoprite CFO Marius Bosman has served as the company's financial director since August 2004. He has been with Shoprite since 1993.