South Africa's biggest grocery retailer Shoprite reported stronger sales for the year ended 28 June, helping adjusted headline earnings per share rise 12.5% to R15.79.
The group increased its full-year dividend by 11.8% to R8.73 a share. Shoprite opened 232 stores during the year and added 5 491 direct employees.
Shoprite directors said the acquisition of Vida e Caffè strengthened its presence in the coffee and quick-service restaurant market, while adding operational expertise in the sector.
The group also finalised the acquisition of an initial majority stake in South African technology and payments company R&A Cellular. The company operates a device network that enables informal and semi-formal micro-retailers to provide access to high-frequency financial services.
SA grocery operations lead growth
Shoprite’s South African grocery stores performed particularly strongly during the year. The segment’s sales increased by R15.2bn, or 7.1%, to R228.7bn.
Shoprite and Usave sales increased by 4.3%, despite internal selling-price deflation of 0.1% and 0.6%, respectively. Checkers and Checkers Hyper sales rose by 10%.
The stronger performance in South African grocery operations helped group revenue increase 7.1% to R274.8bn.
Pieter Engelbrecht, Shoprite’s chief executive, said the group’s performance was achieved in an environment where affordability and low prices remained central to its customer offering.
Internal selling-price inflation in the South African supermarkets segment was 0.8%, compared with Stats SA’s official food and non-alcoholic beverages inflation of 3.9% for the period, he said.
“People often like to compare percentages, but 1% growth for Shoprite is R2.5bn, while 7.2% growth equates to an additional R18.1bn in sales compared with the previous period,” Engelbrecht said.
Customer visits to Shoprite’s South African outlets increased by 5.3%, while average basket spend rose 1.8%. Private-label products accounted for 20.1% of participation, excluding liquor.
Digital and pet-care businesses expand
Shoprite’s Petshop Science business reached 185 stores and increased sales by 74.5% after opening 41 net new stores.
The group’s on-demand digital platform, Sixty60, increased sales by 34.5% to R25.5bn, adding R6.6 billion in revenue during the year.
International operations improve
Outside South Africa, Shoprite supermarkets delivered 11% sales growth.
Although operating and economic conditions remained challenging, the segment reported improved profitability, partly because of lower diesel costs for electricity generation in Zambia.
“We continue to maintain a disciplined approach to capital allocation and portfolio focus. Our operations on the continent now cover seven countries, all relatively close to our South African home base,” the company said.
Employee investment
Shoprite paid about R319m to eligible South African employees through the Shoprite Employee Trust.
It spent R1.1bn on employee training, including R102m on training 2 880 participants in the Youth Employment Service programme.
The programme provides unemployed young people with workplace experience.
Group diesel costs declined to R240m from R327m, primarily because of lower diesel expenditure in Zambia. Diesel spending in South Africa was marginally lower because generators were needed less often.
THE NATIONAL