Shoprite’s half year total sales rise despite alcohol sales plunging by 21.8%

SOUTH AFRICA – Africa’s largest retailer Shoprite, has indicated they are going a head with plans of exiting the Nigerian market with the sale of stake of its subsidiary, Retail Supermarkets Nigeria Limited.

In a trading update, the supermarket chain owner highlighted that the terms of sale of the West African business had been concluded and that the transaction had been lodged with the Nigerian Federal Competition and Consumer Protection Commission for approval.

“Management expects the transaction to be approved by the end of the 2021 financial year,” said Shoprite.

Last August, Shoprite announced its decision to exit Nigeria after 15 years of operations following lower consumer demand.

Other than Nigeria, the South Africa headquartered store has been reviewing its long-term options outside home market i.e in Kenya, Angola, Nigeria and Zambia.

Shoprite has reported a 4.7% growth in half year merchandise sales to US$5.7 billion.

Shoprite was set to officially close operations in Kenya by January but it has been met with hurdles following a shopper filling a petition claiming to have been injured in one of its branches.

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In reply to the case filed, the retail chain has asked the High Court to lift the order as it was causing it massive financial losses, halting its exit plan and likely to expose it to lawsuits.

The continent’s top supermarket posted a 4.7 percent growth in total merchandise sales to R83.4 billion (US$5.7 billion) during the six months ended on December 27 last year, attributed to the 6.3 percent increase in total sales during the period.

This was despite the alcohol trade ban initiated in South Africa which saw its LiquourShop division record a 21.8 percent plunge.

“The total number of days that our liquor business was closed added up to 79 days over the six months: 60 days during the first quarter and 19 days during the second quarter,” said Shoprite.

However, the group said its core business, the South African supermarkets, was resilient and contributed 78 percent to total sales.

It said the supermarkets’ growth inched up by 5.6 percent and like for like by 4.8 percent.

The South African supermarkets business, excluding LiquorShop sales, achieved a 7.8 percent sales growth, and like-for-like, growth was 5.7 percent.

Checkers Hyper continued to be star performers as sales increased 11.1 percent while Shoprite and Usave grew 5.6 percent.

The group’s supermarket business in the rest of Africa performed poorly, only managing to increase sales in constant currency terms by 0.9%. In rand terms its non-RSA supermarket sales declined by 8.4%.

Shoprite blamed this on the “pre-existing challenges from a macro-economic and consumer affordability perspective” which were “exacerbated by Covid-19 and its associated lockdown restrictions”.

Its non-RSA supermarket business contributed 10.2% of group sales during the period.

Shoprite sees half-year profits growing by between 12.5% and 22.5% compared with the same period a year ago.

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