Retailer's full year turnover up 22.3%

Shoprite Group said in a trading update today that for the 12 months to end June 2008 it increased total turnover by 22,3% to about R47,7bn. Growth on a like-for-like basis was 18,0%.

During this period internal food inflation rose to 10,6 % compared with less than 6% during the corresponding 12 months. The South African supermarket division, the core operation of the group, increased sales by 21,8%. The dominant brand, Shoprite, grew turnover by 25.0%. This growth is still somewhat distorted by the impact on its sales by the industrial action in the first half of the 2007 financial year, the retailer said.

The effect of higher interest rates

Growing by 15.6%, Checkers' turnover reflected the effect of higher interest and bond rates on the credit leveraged sector of the community, the group said.

"The Group's success in a tough consumer spend environment has been driven by management's strategic decision to cut margins on basic foodstuffs in an attempt to alleviate the impact of worldwide food price increases on consumers. Combined with Shoprite's positioning on lowest prices, this resulted in a customer transaction increase of 10.3%," the group said.

Food inflation exerts pressure

The 100 supermarkets the group operates outside the borders of South Africa increased turnover by 38.2% from the previous year. The growth achieved on a like-for-like basis was 30.5%. As elsewhere, food inflation in these countries in Africa also put upward pressure on prices.

The franchise division, trading mainly under the OK banner, managed a turnover increase of 17.0%. Unlike the food divisions, the furniture division continued to operate in a near deflationary environment.

Despite lower consumer spending on durable goods and the introduction of the National Credit Act, the division still succeeded in growing turnover by 5.6%.

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