South African grocery retailer Shoprite has recorded an increase in profit during the first half of its fiscal year despite low food inflation and increasing operating costs.
Shoprite, South Africa’s largest grocer, announced yesterday (21 February) that diluted earnings per share rose 13.6% during the six months ended 31 December to 236.8 cents a share.
During the half, turnover increased 9.4% to ZAR36.26bn (US$5bn), while trading profit rose 11.9% to ZAR1.8bn.
Commenting on the results, CEO Whitey Basson said: “The six months under review were difficult for food retailers, because of the low food inflation and the growth in operating expenses, over which they have little control. In the case of our group, we contended with internal deflation which averaged 1.2% for the period. During the same time, our expenditure on electricity, water as well as rates and taxes increased by 36%.
Shoprite said its increase in operating expenses was “exacerbated” by investment in infrastructure and in new outlets but added that the investment made it possible for the retailer to help it raise its trading margin to 5.1% against 5% in the same period last year.