JOHANNESBURG - Shoprite Holdings on Tuesday reported full-year earnings in
line with analyst estimates as Africa’s largest food retailer boosted market
share in South Africa
ahead of a partial tie-up with clothing and furniture specialist Steinhoff
International Holdings NV.
Headline earnings per share, which exclude one-time items,
rose 12 percent to 10.07 rand in the 12 months through June, the Cape
Town-based company said in a statement on Tuesday. The board declared a
full-year dividend of 5.04 rand a share, an increase of 12 percent. Shoprite
expects “positive sales momentum to continue,” the retailer said, after revenue
advanced 8.4 percent.
The shares rose 2.5 percent to 206.08 rand as of 9:23 a.m.
in Johannesburg,
extending the year’s gain to 20 percent and valuing the company at 123 billion
rand ($9.4 billion).
Pieter Engelbrecht Chief Executive Officer said: “We
believe there is room for further growth as we continue to improve efficiencies
and profitability both in South
Africa and beyond the country’s borders.”
While the South African economy is in a recession, “the
group remained resilient with growth in sales and market share.”
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The earnings are the first to be reported by Shoprite since
fellow retailer Steinhoff agreed to buy a 22.7 percent stake as part of the
planned listing of its African assets including clothing chain Pep.
This will be the first step taken by South African
billionaire Christo Wiese, who chairs and is the largest shareholder in both
companies, in combining his interests in the retail giants. A previous
plan was called off in February.
What Benefits?
“We don’t really see the synergies between food and
furniture and more information is needed on how these benefits are found,”
Damon Buss, an analyst at Electus Fund Managers Ltd. in Cape Town, said by
phone. “We also have questions about the difference in strategy between the two
companies with Shoprite having been more organic growth traditionally and
Steinhoff more acquisitive growth.”
The shares fell the most in almost four months on July 18
after Shoprite reported weaker second-half sales growth partly due to a
slowdown in stores beyond its home market. Retailers including Shoprite have
been relying on growth across sub-Saharan Africa to help offset sluggish
trading in South Africa,
where consumer confidence has deteriorated.
The company has been focused on capturing market share in
three different tiers of customers, Charles Allen, a London-based analyst at
Bloomberg Intelligence, said by phone. Growth in Nigeria
and Angola
has been “very impressive” while South African chain Checkers has also
performed well, he said.