Shoprite 'probably beating' rivals

Africa's big retailer, Shoprite, yesterday released its trading update, in which it said that for the 12 months to June the group increased its total turnover 24.5% to R59,3bn. Year-on-year growth was 19.1%.

The South African supermarket division, the core operation of the group, increased sales 22.8%.

The group said in a statement that this division had continued its policy of cutting margins on basic foodstuffs to alleviate the effect of food price increases on consumers.

“They are trading well, probably better than most food retailers in SA,” said Coronation Fund Managers investment analyst Quinton Ivan.

He said that from the trading update it appeared that Shoprite had managed to grow its volumes 3% while its competitors either reported negative or flat growth.

“They are most likely gaining market share,” Ivan said.

Absa analyst Christopher Gilmour said: “I do think the market was expecting that.

“Their policy of targeting the lower end of the market and taking that to the rest of Africa was a clever strategy that has worked for them,” he said.

Shoprite said turnover growth had slowed in the second half of the year to 21.8% from 27.3%.

“Management ascribes the slower turnover growth to the increasing pressure on the disposable income of consumers and the lower internal food inflation, which reduced from 16.9% in the first six months to 14.7% in the second half,” the statement said.

Internal food inflation increased to 15.8% compared with the 10.6% during the previous corresponding 12 months.

Meanwhile, retailer Massmart also posted a 10.4% growth in total sales to 28 June. The group sales revenue reached R43,1bn.

Source: Business Day

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