Shoprite said yesterday 2023 was extraordinary as the retailer gained record levels of market share, and increased profits and dividends despite footing a hefty R1.3 billion diesel bill amid unprecedented levels of load shedding.
In its group results for the 52 weeks ended July 2, 2023, South Africa's largest grocer said headline earnings per share from continuing operations of 1166.2 cents in the year ended July 2, from 1063.9 cents a year earlier.
Shoprite said it gained record levels of market share as sales of merchandise increased by 16.9% to R215bn, underpinned by its core Supermarkets RSA segment. Supermarkets RSA sales of merchandise increased by 17.8% to R173.6bn
The board declared a final dividend of 415 cents, compared to 2022's 367c per ordinary share.
Shoprite CEO Pieter Engelbrecht said: “In the context of the country's power challenges we are pleased to report growth in headline earnings and dividends per share. It is disappointing, however, that if not for the R1.3 billion expense incurred to power generators across our South African store base, our market-leading sales growth would have delivered higher returns for our shareholders. Similarly, our profit growth would also have resulted in a higher Shoprite Employee Trust distribution for our employees.”
Engelbrecht said 2023 was extraordinary as the group gained record levels of market share, saved customers more than R13.5bn in Xtra Savings, and still managed to increase profits and dividends, despite the prohibitive cost to the business owing to unprecedented levels of load shedding.
“Sales growth of 17.8% in our core Supermarkets RSA business demonstrates our multi-year transformation strategy underpinned by our Smarter Shoprite and core supermarkets segmentation approach.
“Checkers and Checkers Hyper's 18.0% sales growth can be attributed to superb delivery on the value and range our customers have come to know, trust, and expect from us. Checkers Sixty60 increased sales by 81.5%, underscoring our omnichannel customer growth," he said.
According to Engelbrecht, Shoprite and Usave's commitment to low prices and affordability delivered sales growth of 15.6% with second-half sales including the successful integration of 92 Massmart stores into its operations. Shoprite and Usave customer, core to our business, is battling high costs of living and spurring it on to continually improve product affordability.
“Our customers continued to support our efforts across our core supermarket and LiquorShop businesses in South Africa, spending an additional R26.0 billion more than last year with us. This equated to a 1.4% increase in market share, extending our period of uninterrupted South African market share gains to 52 months,” he said.
Sales in the group’s Furniture segment, representing 3.3% of sales, increased by 5.1%. Like-for-like sales increased by 2.0%. Credit sales participation increased to 14.9%, the group said.
The group’s other operating segments include OK Franchise, Transpharm, Medirite Pharmacies, Red Star Wholesale Catering Services (previously Checkers Food Services), and Computicket. Sales generated by this segment increased by 13.3% for the period and represented 6.8% of sales. Sales to its OK Franchise business increased by 13.7%, and the franchise division ended the year with 535 stores.
The group added 340 net new stores to a total of 3 326 as a group. It created 3 651 new jobs, not including the 4 480 people employed since January 2023 as part of the Massmart acquisition.
Looking ahead, the group said for the first six weeks of 2024, sales growth in its core RSA Supermarkets segment remains in double-digits and ahead of the market but at a level lower than that reported for 2023 reflecting the reduction in selling price inflation from it’s peak in February this year to 8.6% for July 2023 and the base against which the segment reports which increased sales by 19.9% during the first quarter last year.
“In terms of costs, the group’s increased diesel expense as a result of the step change in load shedding from last year is in our cost base from September 2023.”
The group continues to trade uninterrupted at current higher stages of load shedding as a result of the group’s solar PV installations and considerable diesel generator infrastructure in place across our South African supermarket operations, it said.
BUSINESS REPORT