‘Extraordinary growth in sales and profits’- Shoprite CEO

First-half profit surges over 25%, as group sees double-digit increase in sales despite impact of the July unrest in KwaZulu-Natal and parts of Gauteng.
Pieter Engelbrecht, CEO of JSE-listed retail giant Shoprite Group. Image: Supplied

Shoprite Group – Africa’s largest grocery retailer – continues to gain market share in its core SA business and posted “extraordinary growth in sales and profits” for the first-half of its 2022 financial year (to January 2), says group CEO Pieter Engelbrecht.

The group on Tuesday reported double-digit (10%) growth in overall sales from continuing operations for the half-year, while its ‘Supermarkets RSA’ business delivered even higher sales growth of 11.3%.

This is despite the impact of the July unrest in KwaZulu-Natal and parts of Gauteng, which affected more than 250 of its stores.

Shoprite’s stellar sales growth performance – the highest within the JSE-listed grocery retailers – boosted its profits.

The group’s basic headline earnings per share (Heps) from continuing operations surged 25.5%, to 522.6 cents (H1 2021: 416.5c – restated).

This saw Shoprite declaring an interim dividend per share of 233c, representing an increase of 22% compared with its 2021 first-half (191c).

“The extraordinary growth in sales and profits reported by the group for the first half of our 2022 year is testament to the capable people of Shoprite, united in their commitment to the group’s millions of customers throughout South Africa and Africa,” said Engelbrecht.

“The execution strength demonstrated throughout our supermarket, furniture and franchise businesses – during what can only be described as some of the most difficult times South Africa has seen for many years – was unsurpassed,” Engelbrecht added.

“Delivering a 25.5% Heps growth from continuing operations in a difficult environment is a result of world-class execution of a clear plan, underscored by our daily obsession with affordability for our customers,” he stressed.

Engelbrecht noted that the group had seen continued growth in all off its retail brands, including Shoprite, Checkers, Checkers Hyper, OK and USave.

“Our South African supermarket business, representing 79.5% of group sales, increased sales by 11.3%. Despite having two of our large format Checkers Hypers still closed due to the July 2021 civil unrest, all of our supermarket brands grew sales ahead of the market,” he said.

“Shoprite and Usave, which together make up 52.5% of our Supermarkets RSA operating segment, increased sales by 7.3%. Checkers and Checkers Hyper, which make up 40% of Supermarkets RSA sale of merchandise, increased sales by 11.4%.”

“After being closed for much of last year due to lockdown regulations our Shoprite and Checkers LiquorShop business, which constitutes 7.4% of the segment’s sales, increased by 49.8%,” he added.

Listen: CEO Pieter Engelbrecht on Shoprite’s first-half profit surge (read transcript)

Shoprite’s share price closed almost 1% firmer on Tuesday at R228.33, following the release of the group’s interim results.

Shoprite intraday share price

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Now if only they would increase the size of their Liquorshops… Imagine how much money they would make.

There is just something quite not right about the “extraordinary growth in Sales and Profit” story here. If, during the Covid years, one food retailer did double the sales of its competitors, you have to ask “how?” And then ask…who were the auditors? Call me paranoid but the Steinhoff, African Bank, Tongaat EOH successes followed by their collapse makes me wonder what is true anymore!

Shoprite is way ahead of its competitors in terms of their strategy of pushing volumes of goods , and they are now attracting new middle class and high end clients feeling the pinch. Pick n Pay seems to have only now caught a wakeup call but they are playing catchup. As for Spar , expect someone to buy them out if they do not turnaround soon.. .

End of comments.

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