Shoprite profit growth outpaces sales‚ despite hold on increases

Picture: Sunday Times

Like most retailers, Shoprite reports in weeks rather than months, and its year to-end June figures received a slight fillip by comparing 53 weeks in its 2016 financial year to 52 weeks in the prior year.

Group sales increased 14.4% to R130bn and aftertax profit 17.2% to R4.8bn.

Shoprite declared a final dividend of R2.96, taking its total dividend for the year to R4.52, a 17% growth on the prior year's R3.86.

The group's internal food inflation averaged at 3.5%, which was well below SA's official rate of food inflation put at 7.2% by Statistics SA, Basson said.

He attributed profit outpacing sales growth to "rigorous cost control and more effective operating methods".

"Despite intense local competition we managed to keep market share above 30%. In June market share increased to the highest level in three years," Basson said in the results statement.

Shoprite's flagship brand grew sales 9.2% to R47bn. Its 439 stores double as distribution centres for government social security grants, and paid out 19-million grants during the reporting period.

Outside SA, the group opened 22 supermarkets during the review period, most of them in Angola, Zambia and Nigeria, to bring the total number of its supermarkets beyond SA's borders to 207.

Angola was the star performer as, unlike most other retailers, the group was not restricted in its trading by the country's severe lack of foreign exchange. In fact, it was able to replenish its 29 supermarkets, spread throughout the country, on an almost continuous basis. This near-exclusive availability of stock propelled strong sales, to the extent that Angola reported the highest sales growth of all the countries where Shoprite trades, it said in the results statement.

Shoprite opened seven supermarkets in Nigeria during the reporting period, and intends opening four more in the financial year under way.