SOUTH AFRICA: Shoprite bucks downturn with sales growth

By Katy Askew | 5 November 2012

  •  Total Q1 sales up 15.6%
  •  South African sales up 12.2%, rest-of-Africa sales gain 34.3%
  •  Cautious on Christmas trading outlook
Shoprite sees "strong" Q1

Shoprite sees "strong" Q1

South African supermarket operator Shoprite Holdings said it was able to report "strong growth" in its first quarter, despite ongoing "depressed market conditions".

The company said total sales increased by 15.6% in the three months to the end of September, boosted by store openings and the performance of its international business. Sales at its supermarkets on the Africa continent were up 34.3%, or 26.4% excluding currency exchange. Meanwhile, in South Africa, revenues were up 12.2%. inflated by the opening of 20 new food outlets.

Despite the strong performance, Shoprite CEO Whitey Basson sounded a note of caution on the key Christmas trading period. With consumers "under increasing pressure" Basson said it was "difficult to predict spending patterns" going into the festive season.

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The Shoprite Group has reported strong growth in the first quarter of its 2013 financial year despite the continuation of depressed market conditions. Total turnover increased by15,6% compared to 10,8% in the corresponding three months.

The high turnover growth was boosted by a strong performance by its non-RSA division which was also positively influenced by the weakening of the rand, as well as further market share gains in South Africa.

The Group's core business, Supermarkets RSA, grew turnover by 12,2% with internal food inflation averaging 3,6% compared to 4,0% for the corresponding three months in 2011. Internal food inflation was below the official food inflation of 5,3% and real sales growth of 8,6% was achieved.

Shoprite CEO Whitey Basson said the performance of the Group's non-RSA operations was boosted by the opening of 20 new food outlets since October 2011. Of these, eight were Shoprite supermarkets and 12 were Usave stores. In constant currency terms, turnover growth for the African operation was 26,4% compared to 13,9% in the corresponding three months. The increase in rand terms was 34,3% compared to 12,7% in 2011.

Although the highly competitive market conditions in which the furniture division traded remained virtually unchanged, turnover grew 11,9% despite the continuing deflationary environment. Other divisions in the Group which in addition to OK Franchise include Medirite and Computicket, grew turnover by 29%.

Basson said with consumers are under increasing pressure, it was difficult to predict spending patterns going into the festive season.

Original source: Shoprite Group

Sectors: Emerging markets, Financials, Retail

Companies: Shoprite

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