Checkers fires warning at Pick n Pay and Woolworths over upper-income shoppers

 ·16 Mar 2021

Retailer Shoprite has published its financial results for the 26 weeks to 27 December 2020, showing a 4.7% lift in the sale of merchandise from continuing operations to R83.4 billion.

Trading profit increased by 18.3% to R4.7 billion, while operating profit was up 5% to R4.5 billion.

Diluted headline earnings per share (DHEPS) increased by 10.4% to 418 cents per share, and adjusted DHEPS increased by 17.1% to 416.2 cents per share.

The group’s core business, Supermarkets RSA – making up 78% of group sales – is represented by 1,685 stores across major trading banners Shoprite, Usave, Checkers, Checkers Hyper and LiquorShop. As a segment, Supermarkets RSA achieved 5.6% sales growth, it said.

“Internal selling price inflation of 4.3% for the period is a function of 4.4% internal inflation for the quarter ending September 2020 and 4.2% internal inflation for the second quarter ending December 2020,” the group said.

The Checkers supermarket chain, inclusive of 38 larger format Checkers Hypers, increased sale of merchandise by 11.1%.

It said that gains in Checkers’ market share continue, evidenced across the board, not just in the upper segment. The number of stores in the Checkers FreshX and Checkers Hyper FreshX format has increased from 28 (December 2019) to 38. Of the total, six are refurbished new-format Checkers Hyper FreshX stores.

The FreshX concept stores were introduced by Checkers as a way for the company to gain market share among more affluent South Africans. The FreshX concept stores feature more upmarket furniture and signage – including benches and tables for customers to test samples.

Checkers, inclusive of Checkers Hyper, now operates from 265 stores in South Africa and collectively they represent 40.0% of the group’s core Supermarkets RSA segment’s sales.

Shoprite said that it opened a net total of 60 new stores comprising 25 corporate and 35 franchise stores during the 12 months.

Checkers Sixty60, the group’s grocery delivery application and has been rolled out to 157 stores by the end of December 2020, up from 87 stores in June 2020.

The group’s Xtra Savings Rewards Programme launch in the Shoprite supermarket chain during October 2020 has seen strong growth. Together with the Checkers Xtra Savings Rewards Programme launched 12 months prior, the Xtra Savings Rewards Programme now has a combined base of over 17 million members.

Shoprite said that the changes to shopping patterns ushered in as a result of Covid-19 lockdown regulations have remained largely in place. Customer visits for the six months declined by 16.3%, however, average basket spend increased by 26.2%. Market share figures reflect ongoing market share gains for the 22 months to December 2020, it said.

“The Supermarkets RSA business has achieved 22 months of uninterrupted market share gains and in the six months  to 27 December 2020 the Group created a total of 4,305 new jobs,” said chief executive officer, Pieter Engelbrecht.

Shoprite declared an interim dividend of 191 cents per share, up 22.4%.

The group said it will focus on growing Checkers’ position in the mid-to-upper segment of the market, rolling out smaller, lower capex Shoprite supermarkets, and leverage the significant opportunities that exist as a result of our Xtra Savings Rewards Programme.

Read: Shoprite has opened its bursaries for South African students – here’s how to apply

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