How much money you would have if you invested R1,000 in Shoprite, Woolworths, and Pick n Pay in 2015

Shoprite’s share performance has outperformed its peers over the last decade, while Pick n Pay and Woolworths’ share prices have declined.

Although all three groups provide essential goods to customers, their fortunes have varied dramatically since 2015.

Shoprite, which also owns Checkers, is the largest retailer in South Africa and continues to see strong growth on a robust operational performance, particularly within its core South African market.

A key part of the group’s recent success is its ability to adapt to market demands and expand its offerings. This includes innovations like the rapidly growing Checkers Sixty60 delivery service.

Shoprite CEO Pieter Engelbrecht recently highlighted the group’s transformation, stating that it would previously take two decades to achieve R10 billion in revenue, which it now does every 15 days.

In addition to its operation efficiency, Shoprite continues to invest in different sectors to drive growth, such as the fast-growing Uniq Clothing by Checkers.

Despite a good decade for Shoprite, its competitors have faced some serious challenges over the last decade, many of them self-inflicted.

Woolworth’s share price growth has been hampered by the country’s weak economic environment and its disastrous takeover of David Jones.

Woolworths bought the Australian department store in 2014 for R21.4 billion and sold it for R1.1 billion eight years later.

In addition to the initial purchase price, Woolworths also invested R7.2 billion in additional capital during David Jones’s tenure.

Woolworths is not the only company to make a massive blunder over the last decade. Pick n Pay’s Ekuseni turnaround strategy turned into a disaster.

On the back of losing market share to its competitors, Pick n Pay announced the Ekuseni turnaround strategy.

The strategy focused on new customer value propositions, quickening Boxer growth, and achieving omnichannel and digital leadership.

However, the strategy cost billions, and the group became technically insolvent not long after it was announced.

Amid these financial struggles, Pick n Pay shelved the Ekuseni turnaround strategy and underwent a two-phased recapitalisation plan.

This first included a Pick n Pay rights offer in August 2024, raising R4 billion. The second step was Boxer’s IPO, which raised R8.5 billion for the group.

Shoprite

Shoprite has been the best performer of the three retailers, increasing its share price by 56.57% over the last decade. This means that R1,000 invested in 2015 would now be worth R1,565.66.

In its latest operational update for the second half of 2024, it increased the sale of merchandise from continuing operations by 9.6% to R128.6 billion, which excluded its furniture business held for sale.

The group’s core business, Supermarkets RSA, achieved sales growth of 10.4%. Checkers and Checkers Hyper saw sales growth of 13.5%, including Checkers Sixty60.

The group’s core business, Supermarkets RSA, contributed 83.7% to group sales, which achieved sales growth of 10.4%.

Woolworths

Woolworths is the second-best performer of the three but saw its share price drop by 36.70% over the last decade, meaning that R1,000 invested in the company in 2015 would not be worth R633.04

Despite now exiting David Jones, the group still faces strong headwinds, including the poor performance of its apparel businesses in South Africa, Australia and New Zealand.

Woolworths noted that it expects headline earnings to decrease by between 22% and 27% for the second half of 2024.

Although the group’s food business continues to perform well, the lower contributions from the apparel businesses in South Africa, Australia and New Zealand were disappointing.

Speaking with BusinessTech, Chantal Marx, Head of Investment Research at FNB Wealth and Investments, noted that Woolworths’ financial guidance was disappointing.

Marx said the bottom-line guidance was tracking well behind full-year expectations, even if revenues beat expectations.

However, she noted that consumer sentiment is improving due to moderating inflation, easing interest rates, and the prolonged suspension of load shedding.

There is also improved consumer sentiment in Australia, and the uplift in retail sector sales buoyed by Black Friday were key highlights.

Nevertheless, consumer behaviour and discretionary spending remain down amidst the elevated cost of living.

Due to the stock’s near- and medium-term challenges, the stock is looking fairly valued on a forward PE of 14.1 times.

Given the near- and medium-term challenges facing the group, Marx said that the stock looks fairly valued on a forward PE of roughly 14.1

Pick n Pay

In last place is Pick n Pay, which has seen its share price drop by 37.77% over the last decade. This means that R1,000 invested in 2015 would now be worth R622.34.

The two-step recapitalisation strategy followed the group recording an after-tax loss of R3.2 billion for the year ended 25 February 2024.

The group is starting to see signs of life, with the company stating that better retail discipline has improved its company-owned supermarkets.

This was a key part of the business turnaround, which focused primarly on Pick n Pay stores, especially those that were loss-making, and right-sizing the business.

In its latest trading update for the 45 weeks ending 5 January, the group also noted that like-for-like sales at Pick n Pay SA increased by 1.9%.

Implementing the group’s Store Estate Reset plan resulted in total sales lagging like-for-like sales due to planned store closures and conversions.

Boxer was once again a strong performer for the group, showing 11.4% (6.7% like-for-like) in the 45 weeks.

Meanwhile, clothing sales growth in standalone stores was 10.0% (1.7% like-for-like), while Online sales growth stood at 42.5%, driven by growth in Pick n Pay asap! and Pick n Pay Groceries on the Mr D app.

Shoprite vs Woolworths vs Pick n Pay