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Shoprite reports turnover growth of 11.2%: Whitey Basson – CEO, Shoprite Holdings

‘I’m not that gloom-and-doomed about South Africa, except to say that everything is wrong.’

SIKI MGABADELI: Shoprite released its annuals to the end of June today, showing turnover growth of 11.2%. Trading profit increased by 10.7% and headline earnings per share are up by 10.8%.
    Whitey Basson is CEO and joins us now. Whitey, thanks so much for joining us today. It’s nice to read numbers that are in double digits. We’ve been very concerned, of course, with many other companies struggling in this kind of environment in South Africa.

WHITEY BASSON: Ja, we are very happy with the figures, especially as, as you’ve just mentioned, the environment in South Africa is not conducive to big numbers and everybody is a bit worried – what about the future, what about unemployment, what about the disastrous state of the security in South Africa, how is Eskom going to perform and lots of things which are vague for us to make proper investment decisions.

SIKI MGABADELI: Well, you are running Shoprite of course and you’ve got a number of stores all over South Africa and other parts of the African continent. And yet you are able to still keep prices low. How are you able to do that?

WHITEY BASSON: We’ve been keeping prices low for the last 15, 20 years. We took a decision that we would be the cheapest supermarket in South Africa, no matter what. So we had to work on all our distribution systems, on our computers, and literally everything that we could think of to run a more efficient business – fewer people at the head office, fewer people at distribution centres, whatever we had to do to keep the cost of running the business low and let the money rather be spent at store level, where the people where the customers and colleagues meet … So that was what we set out to do.
    We revise it every year – in fact, we are going through a massive revision at the moment as we are sitting here, to make sure that we’ll be ready for the next ten years.

SIKI MGABADELI: And your supermarket network? I understand you are planning to open more stores across the continent. How would you compare conditions in South Africa with other countries that you operate in?

WHITEY BASSON: All the other countries – or most of the other countries – I think for the lowest one you are talking of about a 5% GDP growth compared to our less 2%. So everybody is double the GDP growth. There is less competition and, to be quite honest with you, it’s now becoming easier sometimes to just get rid of red tape and get things done in a lot of the [other] countries. So we need to pull up our socks and stay the leader in the African continent.

SIKI MGABADELI: What are your plans in terms of new supermarkets in South Africa and the rest of the continent?

WHITEY BASSON: Well, I think our total supermarkets for South Africa and supermarkets in Africa …the total will be 915 to June and non-RSA will be 195. And new openings – we opened 58 for the current year, [and plan] 96 for the following year.

SIKI MGABADELI: Okay. Let’s talk about the furniture division then. You’ve seen sales increasing there by 13% as well, and new stores opening in that division as well. What are your plans for that division – expansion still?

WHITEY BASSON: Yeah. We’ve just taken over quite a number of the Ellerine stores. You saw there were 54-odd stores that we took over late in the year. They haven’t contributed much to turnover or profitability but there are 54 stores up and running for this current year. It makes a major boost for us – more than 10% of the stores that we have currently under operations – so that is good for us. And no, we have no problems with that. It’s doing exceptionally well, it’s well liked by the customers and we are happy with it.

SIKI MGABADELI: The durables market, though, in South Africa has been struggling. Why do you think you guys–

WHITEY BASSON: Well, the durable goods market is a big market. So when you say it’s been struggling, ja, it’s off a bit, but there’s a competitor of ours out of the marketplace. We are reasonably well placed. So we think we should be able to get some business from people who are struggling, who are not in as good shape as ourselves. But if you’ve taken the whole of Ellerines out of the market, that means a lot of extra turnover to be spread for the guys that are left behind. So although macro-wise it is not going to be as good as it used to be, I think for the individual tradesman it shouldn’t be bad.

SIKI MGABADELI: And what’s your outlook, Whitey?

WHITEY BASSON: My outlook is pretty good because we have a spread of stores from Africa right down to South Africa. I’m not that gloom-and-doomed about South Africa, except to say that everything is wrong, but I’ve seen people turning it around. I think people are realising the fact that we just can’t rest on our laurels and just expect that Eskom is going to come right, that we can change police commissioners five times in six years and all sorts of things and expect that crime will be looked after and that inflation won’t go up and that the economy will boom if we have to spend 135 000 hours of load-shedding – it’s crazy.

SIKI MGABADELI: Thanks to Whitey Basson.

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