South Africa’s biggest retailer eats R500 million load shedding bill as sales and profits soar

Shoprite continues to increase sales and profits – despite having to fork over R500 million to keep load shedding at bay.

In the group’s results for the six months ended 31 December 2023 (H1 2024), CEO Pieter Engelbrecht said that the 14% (R12.4 billion) increase in sales from Shoprite’s core business segment Supermarkets RSA comes off the back of sales growth of 17.5% over the prior period.

Profit for the period jumped 4.2% to R3.4 billion from R3.27 billion in H1 2023.

The group has also seen a period of uninterrupted market share gains in its core business for 58 months, it said.

Checkers and Checkers Hyper saw sales growth of 13.7%, with Checkers Sixty60 increasing sales by 63.1% (H1 2023: 86.8%).

The store base with Checkers Sixty60 increased from 394 sites in H1 2023 to 505 stores in H1 2024.

Shoprite and Usave increased sales by 13.1%, with the former growing sales by 13.2% after acquiring 51 stores for Massmart.

The segment’s LiquorShop business increased sales by 25.2% (17.4% when excluding the contribution from Massmart).

Regarding smaller, adjacent stand-alone stores, 41 were opened in the six-month period, including 10 UNIQ clothing stores, taking the total to 19.

Supermarkets Non-RSA increased sales in rand terms by 6.2%, while sales in the group’s furniture segment increased by 1.7%, with like-for-like sales rising by 0.7%

The group’s other operating segments, including OK Franchise, Transpharm and Medirite Pharmacies, saw sales increase by 23.1%.

Despite the increase in sales, the operating environment in South Africa remained incredibly challenging, especially when considering the cost of diesel generations during load shedding.

The group spent R500 million on diesel to power generators over the 182-day period, which comes out to R2.75 million a day.

Although this cost severely impacts trading profit, Shoprite still recorded an 8.6% increase in headline earnings to 610.5 cents per share when including discontinued operations.

The group also upped its interim dividend by 7.7% to 267 cents per share.

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