Volatile currencies impact Shoprite’s sales growth

SOUTH AFRICA – Shoprite managed to grow turnover by 10.4% over the past 12 months, despite challenging trading conditions both locally and in non-domestic markets, the group revealed in its operational update.

The update focuses on the trading period over the past 52 weeks ending July 2, 2017. Turnover for the 52-week period compared to the 53 weeks of the previous year (2016) increased by 8.2%.

Operations in South Africa increased by 10.1% over the past 52 weeks. On a 53-week basis this is 7.7%, the group indicated in its note to shareholders.

Internal inflation slowed to 5.9%, from 7.4% reported in December 2016, as a result of the drought easing. Inflation in the previous year was reported at 3.9%.

Non-South African operations reported sales growth of 13.5%, this is 11.7% on a 53-week basis.

Lower commodity prices and the devaluation of certain currencies had a material impact on prices of imported products during the latter part of the year, the group explained.

If currencies were constant, then sales effectively grew 33.8%, or 31.6% on a 53-week basis.

“The fourth quarter in particular is where the previous high base in Angola’s sales impacted growth for the year,” the group explained.

The furniture division grew sales by 6.2%, or 4.3% on a 53-week basis. It faced industry challenges around affordability requirements of the National Credit Act, and durable purchases by consumers were also limited.

Other operating segments reported growth of 7.7%, or 7% on a 53-week basis.

Earlier this year a possible merger between Shoprite and Steinhoff fell flat after the parties could not reach an agreement.

The deal would have seen Steinhoff take control of Shoprite in a buy-out offer to minority shareholders, Fin24 reported.

July 18, 2017: Fin24

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