SOUTH AFRICA – South Africa’s leading retailer, Shoprite reported growth in sale of merchandise to US$5.47 billion, a 0.2% increase, during its half year period ending 30th December 2018 while trading profit fell 15% to US$201.93 million.
The grocery chain reported that its Africa division, with exemption of SA, fell into a trading loss of US$4.47 million during the period under review from a trading profit of R553m in the first half of its 2018 financial year.
The retailer posted 2.1% growth in its home market to US$4.22 million weighed down by a 13% decline to US$790 million from its rest of Africa stores.
Shoprite attributed the performance to challenging business environments in its non-south African markets, reports Business Report.
However, Pieter Engelbrecht, chief executive officer Shoprite, said that the despite as underperformance, Shoprite is poised to improve its performance in future owed to the major investments pumped across its stores.
“The decline in headline earnings per share for the six months ending December 2018 must be viewed in the context of various critical expansion and technology projects the group has embarked on in the past five years to ensure future growth and modernise our technology landscape
The timing unfortunately coincided with the deterioration of the South African and non-South African economies and consumer expenditure levels over this same period.
We have dealt with many internal challenges, investment expenses and operational issues relating to the implementation of strategic decisions including the roll out of the new SAP ERP system,” Pieter said in the results statement.
Its diluted headline earnings per share dropped 24.1% to 398.5 cents during what the company said was a tough period characterised by significant financial pressure.
According to Engelbrecht, Shoprite has a market capitalisation of about US$6.92 billion, over 146,000 employees, with 2,738 stores and a network of distribution centres across 15 countries.
“The group’s strategy to capture a greater proportion of the top-end, affluent consumer segments’ grocery expenditure has seen Checkers, excluding the larger format Hyper stores, increase sales by 4.3%.
The IT re-platforming was an absolute imperative and represents the culmination of four years of planning and it will ultimately improve our global competitiveness,” Engelbrecht added.
Following the performance, the grocery chain has cut its interim dividend 24%, reports Business Daily