South Africa’s largest retailer, Shoprite on Tuesday (8 September), reported a healthy rise in its key market for the 52 weeks to 28 June 2020, despite significant Covid-19 lockdown restrictions impacting the group.
“Our core Supermarkets RSA operating segment increased sales by 8.7%, representing a R9.8 billion increase to R122.4 billion. Our Supermarkets Non-RSA continuing operations’ sales declined by 1.4% in rand terms, however, it increased by 6.6% in constant currency terms,” said chief executive officer, Pieter Engelbrecht.
- Sale of merchandise increased by 6.4% to a record R156.9 billion;
- Excluding the impact of hyperinflation, trading profit increased by 10.4% to R8.3 billion;
- Diluted headline earnings per share (DHEPS) increased by 2.5% to 765.8 cents;
- Adjusted DHEPS increased by 16.6% to 717.5 cents;
- Full year dividend, in line with Group policy of 2x DHEPS cover, increased by 20.1% to 383 cents;
Shoprite said it opened a total of 147 stores comprising 101 corporate and 46 franchise stores over the period.
The group’s core business, Supermarkets RSA, making up 78% of group sales, is represented by 1,638 stores across our major trading banners Shoprite, Usave, Checkers, Checkers Hyper and LiquorShop.
As a segment, Supermarkets RSA achieved 8.7% sales growth and on a like-for-like basis grew sales by 6.8%. Second half sales grew by 7.5%. Second half internal inflation of 3.4% increased from the 2.7% reported for the first six months to average 3.0% for the year, Shoprite said.
The two weeks preceding South Africa’s initial 35 days of Level 5 lockdown resulted in elevated sales growth across all three of our supermarket brands but noteworthy was the significant growth reported by our repositioned mid-to-upper end Checkers (including Checkers Hyper) business which now represents 39.6% of local sales.
The Checkers supermarket chain, inclusive of 37 larger format Checkers Hypers, increased sale of merchandise by 13.5%. “Checkers’ strategy to grow its share of spend in the mid-to-upper segment of the market continues to underpin the chain’s growth. Checkers, inclusive of Checkers Hyper, now operates from 261 stores in South Africa,” the group said.
Of this, the number of stores in the Checkers FreshX format has increased to 28 from 21 stores in the prior year, it said.
Shoprite increased sales by 5.5%, adding 6 net new stores to its base to end June 2020 with 503 stores. Usave increased sales by 16.5%, adding 14 net new stores to end the reporting period with 374 stores.
The group’s Liquor business, represented by Shoprite LiquorShop and Checkers LiquorShop’s first half sales growth momentum continued into February and accelerated, pre-lockdown, during March.
Covid-19 lockdown regulations then required the complete closure of our liquor business for 66 days and subsequently restricted trade to four days a week (Monday to Thursday) for the month of June.
The combination of 20.5% first half sales growth followed by second half sales decline of 29.5% resulted in a 3.3% sales decline for the year. LiquorShop represents 5.8% of Supermarkets RSA’s sales, it said.
Looking ahead, Shoprite said it has ‘considerable project work to catch up on’, due to lockdown. In total, inclusive of our 2020 catch-up, we budget to spend an estimated R4.8 billion in capital expenditure with approximately 95% of the amount relating to our RSA operations.”
Taking into account the limitations on trade in certain segments due to existing lockdown regulations, the group said it has traded ahead of expectations since the beginning of July to date.