Shoprite profits miss forecasts

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ShopriteGeneral Independent Newspapers. Photo: Leon Nicholas.

Johannesburg - Shoprite Holdings full-year profit missed analysts’ estimates as South Africa’s largest food retailer invested in new stores and electricity costs increased.

Earnings per share excluding one-time items rose 3.3 percent to 6.98 rand in the 12 months through June, the Cape Town-based company said today in a statement.

That compares with the 7.35 rand mean estimate of 15 analysts surveyed by Bloomberg.

Sales gained 11 percent to 102 billion rand while the final dividend was raised 1.4 percent to 2.18 rand.

“With economic growth expected to remain below 3 percent in the new financial year there is not much relief in sight for the beleaguered South African consumer,” the company said.

“The improved sales growth in the last quarter of the 2014 financial year has continued into July and beyond, but with market conditions unchanged, it is doubtful whether this can be sustained.”

South African retailers are struggling as high unemployment and rising inflation forces shoppers to cut down on major purchases.

Retail sales were unchanged in June, the weakest year-on-year performance since December 2009.

Inflation was also unchanged in June at 6.6 percent.

Revenue growth at the company’s South African supermarket operation added 8.7 percent, compared with 9.8 percent growth a year earlier, while furniture division sales grew 12 percent, up from 4.7 percent in 2013.

“This was achieved in an environment of constantly rising costs, especially in the areas of electricity and energy over which we have no control,” Shoprite said.

Revenue from outside South Africa, which accounts for almost a fifth of Shoprite sales, increased by 27 percent.

Shoprite shares fell as much as 4.9 percent to 146.60 rand, the biggest intraday slide since January 17.

They traded at 147 rand as of 9:17 am in Johannesburg. - Bloomberg News



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