Skip to main content

Shoprite profit takes a knock as strikes, poor economy hit sales

| Retailer trading results

Shoprite earnings for the 2019 year was down 18.2%, as the retail group faced a "testing year".

The retailer on Tuesday (20/08/2019) released its financial year results for the year ended June 30, 2019. Its shares which opened at R140.10 slumped 5.48% to R132.41 by 09:10 before recovering to R139 by 09:32. 

Key figures show that sales of merchandise grew by a mere 3.6% to R150bn. Operating profit was down 8.2% while net profit declined 18.2% to R4.2bn.

Basic headline earnings per share was also lower, by 19.6% to 780.8c. Basic earnings per share was down 17.9% to 768.2c.

The total dividend declared for the year came to 319c, 32.1% less than the 484c declared the previous year.

While Shoprite's supermarket division in SA performed well, generating 74.9% of sales, the group's overall sales declined due to a "constrained economy, inventory shortages post-industrial action and the implementation of a new enterprise wide IT system" across stores, CEO Pieter Engelbrecht said.

To keep goods affordable for customers, selling price inflation for the year was at 1.2%, similar to the year before. "We traded throughout the year with many items in key categories in deflation."  At year-end, the number of products priced lower than the previous year came to 9 679.

During the period, the group implemented a strategy to capture the "premium food segment" by repositioning Checkers. "The number of Checkers stores in the new look FreshX format now totals 21," Engelbrecht said. Shoprite targets 80 stores to be upgraded in the new format during the medium to long term.

Non-RSA stores disappoint

However, beyond South Africa, the group was challenged with forex shortages, currency devaluations and the aftermath of "rampant inflation" in Angola.

Supermarkets outside South Africa reported a trading loss of R265m.

"Despite no foreseen respite in short-term trading conditions in the region, we are committed to our customers in the 14 non-RSA countries in which we operate.

"We remain confident in the opportunity our entrenched position as Africa's leading food retailer will bring as the economic fortunes of the countries where we trade improve," Engelbrecht said.

Related Articles

Spar’s IT system failure has cost the company R...

By: IOL News Local retailer Spar has been hit hard this financial year and said on Thursday that it will have to withhold a final dividend to save cash after a huge IT system failure this year.

Tough decisions made, sets the tone for a more ...

The SPAR Group lifted turnover 10.1% to R149.3 billion (2022: R135.6 billion) for the year ended 30 September 2023. This was largely driven off the back of strong performance from the Irish business which saw growth of 21.9% in ZAR terms. Souther...

Woolies’ online grocery sales surge

By: Myles Illidge – My Broadband Woolworth’s trading update for the 20 weeks ended 12 November 2023 has revealed that the increased penetration of its Woolies Dash food delivery service resulted in a significant increase in online sales.

Dis-Chem reports group revenue growth of 9.4% t...

In the six-month period ending 31 August 2023, Dis-Chem reported Group revenue growth of 9,4% to R17.9 billion over the corresponding half year period to 31 August 2022.

Clicks shares soar as it clocks in higher marke...

By Dieketseng Maleke - IOL Clicks’ share price surged 8% yesterday after it reported record market share gains and a hike in earnings.