Improved H2 sales in SA fail to lift Shoprite FY earnings

Shoprite Holdings’s basic headline earnings per share fell 19.6% to 780.8 cents in the full-year to June 30, despite an improved performance in its home South African (SA) market in the second half of the year.

The owner of the Checkers and Usave retail chains was hit by inventory shortages in SA and currency devaluations in the rest of Africa over the course of the year, while a strike at its largest distribution centre in SA and the installation of a new IT system also negatively impacted sales in the first half.

Shoprite did report significantly improved growth in the second half, largely thanks to its Supermarkets South Africa operation, which delivered sales growth of 7.4% in the six-months ending June 30 and 9.4% in the final quarter.

“We believe that the market share gains reflected in the most recent quarter are testament to our core South African business being back to full operational strength,” said chief executive officer Pieter Engelbrecht.

“Notwithstanding the much improved recent performance in our core Supermarkets South Africa division, it was a testing year. A constrained economy, inventory shortages post-industrial action and the implementation of a new enterprise wide IT system across our store base resulted in lost sales.”

The retailer also blamed currency devaluation in markets such as Angola, Zambia and Nigeria for its rest of Africa business reporting a trading loss of R265 million for the year.