Aug 19, 2014
The Shoprite Group said sales exceeded R100bn for the first time in the 12 months to June 2014. It created 11 762 new jobs and opened a record number of stores in a single year (a net 125 new corporate stores) which saw market share growth for an eighth consecutive year. It increased turnover by 10.5% to R102.204bn to realise a trading profit of R5.714bn (2013: R5.392bn).
“Within the context of the challenging conditions that existed in the South African food retail market, we believe this represents a sound performance,” said Shoprite CEO Whitey Basson.
“Economies of scale, meticulous cost control and increased efficiencies generated by the Group’s extensive distribution infrastructure enabled us to achieve a world-class trading profit margin of 5.6%, marginally below the 5.8% of 2013 as investment into new stores topped R1.6bn.”
The Group improved sales performance in the second half of the year, growing turnover by 11.4% from 9.7% in the first half– a trend which has continued into the new financial year.
Trading profit was impacted by the opening of a large number of new stores in the year. External factors such as electricity and energy costs as well as the introduction of many hybrid bank cards that attract higher card fees also impacted costs.
Headline earnings per share increased by 3.3% from 675.4c to 697.6c and the board declared a final dividend of 218c per share (2013: 215c) to bring the total payout for the year to 350c per share.
Mr Basson said amidst the harsh conditions for consumers reigning during the year, the Group restricted food price increases to 4.7% or 1.4 percentage points below South Africa’s official food inflation figure of 6.1%. The Group remains committed to bringing price relief to SA consumers.
While the country’s official unemployment figure had again soared above 25%, the Group had created 11 762 new jobs during the reporting period and now employs 123 100 people; 107 467 in South Africa and 15 633 beyond the country’s borders.
During the year the Group continued to invest in the future by opening new stores and extending the supply-line infrastructure and information technology supporting them. It opened proportionately more stores in the second half than in the corresponding period in 2013 which affected the depreciation costs in the latter part of the year.
“We opened a net 92 corporate supermarkets – more than ever before and more than any of our competitors. Although the country’s present low economic growth could force the business to cut back expansion plans, the Group is well positioned to take advantage of the eventual economic upswing.
“To satisfy the growth we need, our capital investment focus is shifting increasingly to the rest of Africa where more than one third of its 54 countries have an annual GDP growth rate of above 6%. The Group’s focus for growth in Africa is mainly on resource rich countries where the Group has built up a strong presence over the years.
“In the year to June 2015 we shall be opening 30 supermarkets in Africa. We shall then be trading from almost 200 supermarkets elsewhere on the continent,” Basson said.
In South Africa, sales growth in Shoprite, by far the largest of the three brands with 400 stores and 21.7 million regular shoppers, was affected by high unemployment and the lack of disposable income in its market segment. It nevertheless eclipsed last year’s sales, benefitting from an ongoing campaign of subsidising basic foods aimed at strengthening its positioning as the food chain consistently offering the lowest prices.
Checkers, with 211 supermarkets and Hyper stores, further reinforced its standing as a value retailer while expanding its support base in the LSM 8 – 10 consumer segments. Usave, with its limited range of basic food products offered at permanently discounted prices in its 266 stores, grew sales by 12.9%; almost double the industry average.
Despite consumers’ dwindling expenditure on durables, the furniture division was one of the best performing in the Group. It grew turnover by 12.2% and trading profit by 49.6%. The division, which operates under three brands of which OK Furniture is the biggest and most profitable, opened a net number of 32 stores during the year for a total of 368 of which 45 are in countries elsewhere on the continent.
View results for the year ended June 2014