SOUTH AFRICA – South African retailer Shoprite has eased Africa push to focus on domestic market gains with the supermarket chain owner revealing that it closed the last of its Kenyan stores in February 2021 and terms of sale of 100% stake in its Retail Supermarkets Nigeria Ltd subsidiary have been concluded.
This was indicated in the group’s half year results for the period ended December 2020, highlighting that the transaction has been lodged with the Nigerian Federal Competition and Consumer Protection Commission (FCCPC) for approval.
Management expects the transaction to be approved by the end of the 2021 financial year with Shoprite Group CEO, Pieter Engelbrecht saying, “From here, our capital allocated to the region remains at a minimum and we continue to manage costs as best as we can.”
The retailer has been reviewing its long-term options in Africa as currency devaluations, supply issues and low consumer spending in markets outside South Africa i.e., Kenya, Angola, Nigeria and Zambia have weighed on earnings.
During the six months period, Shoprite’s group sales increased by 4.7% to R83.4 billion (US$5.57 billion) despite liquor sales taking a knock on Covid19 restrictions in its South African supermarkets and currency devaluations eroding footprint across the rest of the continent.
Its core Supermarkets Republic of South Africa (RSA) segment, making up 78.0% of Group sales and represented by 1 685 stores across its major trading banners Shoprite, Usave, Checkers, Checkers Hyper and LiquorShop increased sales by 5.6%.
Adjusting for the closure of the RSA LiquorShop business as a result of nationwide COVID-19 lockdown regulations, the Supermarkets RSA business grew sales by 7.8%.
First half liquor sales tumbled 21.8 percent with the LiquorShop having closed 79 out of the 182 trading days. But the silver lining was that its online sales grew by 80 percent.
In terms of operations, the home business achieved 22 months of uninterrupted market share gains and in the period under review the Group created a total of 4 305 new jobs.
Meanwhile its Non-RSA continuing operations reported constant currency sales growth of 0.9% on the back of 25.3% lower sales volumes and 9.1% internal inflation.
It is noteworthy that Angolan sales declined by 15.5% in constant currency terms due to currency devaluation which increased the prices of imported products, whilst eroded customer affordability.
However, Zambia a key region in the Non-RSA segment, traded well with sales in constant currency increasing by 15.8%.
Overall, the group increased trading profit by 18.3%, whilst making significant strides in other areas: borrowings declined by R5.9 billion (US$394.21m) to R5.5 billion (US$367.48m), inventories reduced by R3.0 billion (US$200.49m) and kept tight its capital expenditure which amounted to R1.6 billion (US$106.9m).
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