Shoprite shares yesterday fell more than 6% in early trade after the group flagged that its sales for the year to the end of December would buckle.
JOHANNESBURG - Shoprite shares yesterday fell more than 6 percent in early trade after the group flagged that its sales for the year to the end of December would buckle on the performance of its sub-Saharan units. 

The continent’s biggest supermarket chain said in an operational update that sales outside South Africa would plunge 7 percent, dragged down by a 50 percent devaluation of the Angolan kwanza and the end of two years of break-neck revenue growth in the country. 

Shoprite said its Angolan operations fell after a 65.9 percent compound growth turnover in the country over the past two years. It said the Angolan experience dragged down other supermarkets outside South Africa to a negative turnover growth of 7 percent in rand terms, which impacted the group’s overall sales performance for the year to June.

The group said its core business in South Africa, however, achieved 5.7 percent sales growth for the year, with internal inflation dropping to only 0.3 percent from 5.9 percent, compared with last year. “Excluding Angola, Supermarkets Non-RSA managed to achieve positive sales growth of 3 percent. 

“A significant drop-off in Supermarkets Non-RSA internal inflation from 14.4 percent in the previous year to only 1.1 percent for the current year was also experienced,” Shoprite said. 

Shoprite shares clawed back some of their losses to close 3.73 percent lower at R212.30, down from R220.52 on Tuesday. Shoprite said its overall sales grew by 3.3 percent to R145.6 billion during the year. It said it achieved this growth despite difficult trading conditions.

Internal inflation 

Shoprite added that, excluding its Angolan operation, the group managed to increase turnover by 5.5 percent for the period. 

“The group’s internal inflation decreased from 7.3 percent in the previous year to only 0.5 percent for the current year,” Shoprite said. Shoprite is expected to release its full-year results next month. It said the improved real turnover growth, combined with positive volume and customer growth, reflected a strong underlying performance, taking into account internal inflation. 

Shoprite said its furniture division was one of the better performers, recording a 9.9 percent increase in sales, while other operating segments, such as OK Franchise, Medirite Pharmacy and Checkers Food Services, achieved growth of 5.2 percent. The group reported a 3.3 percent increase in overall sales to R145.6 billion, compared with 6.3 percent reported in the six months to December. 

Shoprite said that despite the demanding trading environment, exacerbated by the sharp decline in internal inflation, it remained positive about its operational strength, customer support for its brands and strategic priorities.