SOUTH AFRICA – Supermarket chain Shoprite has reported a 7% increase in the sale of merchandise to R81.2 billion (US$5.42 billion) in the six months to December, but its diluted headline earnings per share declined by 2.6 percent to 372.4 cents in the 26 weeks ended December 29 from 382.4 cents a year earlier.
The company’s interim earnings before interest, tax, depreciation and amortisation increased by 5.3 percent to R6.8 billion (US$450m), while trading profit on a reported basis fell 3.9 percent to R4 billion (US$264.8m).
The seven percent rise in interim merchandise sales was achieved on the back of a 4.4 percent growth in the volume of products sold and a 2.1 percent expansion in the number of customers.
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 strong liquor sales and its strategy to grow its share of spend in the mid-to-upper segment of the market under its Checkers brand.
The retailer, which owns more than 2,800 outlets across Africa said it is battling with currency devaluations in Angola, Zambia and Nigeria and store closures in Nigeria in the wake of Xenophobia attacks.
Store closures in Nigeria and subsequent 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”, the company added.
This saw sales in rand terms in the group’s international operations, comprising 14 African countries, decline by 3.1%. In constant currency terms, sales rose 4.8%.
Trading profit at its African operations plunged 62.3% on the back of a R68 million reduction 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.
“Supermarkets Non-RSA’s operating environment is expected to remain challenging until such time as currencies stabilise and consumer affordability catches up,” Shoprite said.