SHOPRIT: 13,560 +147 (+1.10%)
Shoprite misses forecasts despite stronger home market
* Headline earnings per share down 19.6%
* Second half improves on S.Africa sales
* In-stock levels in S.Africa now higher
* Rest of Africa reports trading loss of $17 mln
By Nqobile Dludla
JOHANNESBURG, Aug 20 (Reuters) - Shoprite Holdings
missed full-year earnings forecasts on Tuesday, hit by inventory
shortages in South Africa and currency devaluations in the rest
of Africa, which overshadowed an improved second half in its
The owner of Checkers and Usave retail chains is recovering
from a poor first half when sales and profit were hit by a
strike at its largest distribution centre at home and
installation of a new IT system which disrupted supply chains.
The retailer reported significantly improved growth in the
second half, driven mainly by its Supermarkets South Africa
operation, where sales rose by 7.4% in the six-months ended June
30 and 9.4% in the final quarter. This business generates 74.9%
of group sales.
"We believe that the market share gains reflected in the
most recent quarter are testament to our core South African
business being back to full operational strength," Chief
Executive Officer Pieter Engelbrecht said in a statement.
But the improved second half was not enough to lift basic
headline earnings per share, which fell 19.6% to 780.8 cents in
the full-year to June 30, compared with a restated figure of
971.4 cents a year earlier. Diluted headline earnings also fell
Analysts had forecast a fall of 15.5%, IBES data from
At 0920 GMT, Shoprite's shares were down 2.25%.
"Notwithstanding the much improved recent performance in our
core Supermarkets South Africa division, it was a testing year,"
"A constrained economy, inventory shortages post industrial
action and the implementation of a new enterprise wide IT system
across our store base resulted in lost sales."
In-stock levels at the Supermarkets South Africa business
are now higher than before it implemented the new system,
The retailer, with more than 2,900 stores, also blamed
currency devaluation in markets such as Angola - its biggest
operation outside South Africa - a trading loss outside its home
market, higher minimum wages and rent and electricity costs at
As a result of the currency depreciation in Angola and other
countries such as Zambia and Nigeria, the rest of Africa
business reported a trading loss of 265 million rand ($17.19
million) for the year.
Engelbrecht said Shoprite remained committed to its
customers in the 14 African countries it operates in outside
South Africa, despite there being no respite in short-term
trading conditions in the rest of Africa region.
"With respect to non-South Africa, persistently challenging
trading conditions in the year ahead are likely to hamper our
ability to return to profitability," the retailer said.
($1 = 15.4152 rand)
(Reporting by Nqobile Dludla; editing by Jason Neely and Jane
First Published: 2019-08-20 10:03:03
Updated 2019-08-20 12:07:28
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