Shoprite profit gains as grocery shoppers spend more per visit

Despite drop in customer numbers.
Image: Bloomberg

Shoprite Holdings said customer numbers dropped but shoppers bought more per visit as Africa’s largest supermarket chain continues to grapple with the coronavirus pandemic.

Read: Shoprite’s share price tops 52-week high, as SA operations shine

Operating profit rose 19% to R9.7 billion in the year through July 4, the Cape Town-based company said in a statement on Tuesday. Visits declined 3.8%, while the average basket spend climbed 13.6%.

Shoprite, which has put its main focus on the South African market while scaling back elsewhere on the continent, posted strong second-half sales growth as it opens more stores. The group exited Nigeria, Kenya, Uganda and Madagascar in recent months, either selling or discontinuing operations in those countries.

The retailer is adding to its floor space through the purchase of the food units of Walmart’s South African retailer Massmart Holdings. The grocer opened 87 local supermarkets in the year and plans to add a further 131 outlets in 2022.

Read: Massmart sells most food assets to Shoprite for R1.36bn

The owner of chains including Checkers and U-Save increased the final dividend to R3.53, up from R2.27 a year ago. The stock has gained 28% this year, compared with a 10% gain on the FTSE/JSE Top40 Index.

© 2021 Bloomberg

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Customers spend more per visit because prices have gone up @Shoprite

Thus if I visit less = I pay less?

Maybe the 13,6% increase per basket tells us more about the inflation rate than the one published by Stats SA.

Shoprite’s internal price inflation of 3.8% is below official food inflation of 5.4%.

Inflation is not necessarily the driver of basket size, its rather inversely correlated to customer visits. So if customer visit the store less regularly, they buy more while they are there.

The one more thing that I admire about Shopite is that they will not reopen the six burnt down stores.

Out of principle no business should.

Make the looters and arsonists walk 20km or 50km to the nearest store.

And also take them to court to pay for the damages of property and loss of business.

Well, you don’t know the reason but I am sure it is not out of principle to spite looters.
Stores could have been loss making already. Or cannibalized by their other stores. Or potentially be cannibalized by the coming Massmart stores.

Shoprite Holdings include a number of brands. I visit the checkers hyper regularly. I do not know where you get your figures, but a number of the items I buy monthly is way more expensive than 3,8 %, e.g. long life milk is at least 15% more expensive than a year ago. The same with muesli and butter.

@Auretha Could it be that food price inflation is different to CPI? I will let you figure that out. Your anecdotes matter.

Shoprite’s gain is probably also due to a lot less people eating out, and buying more to eat at home.

So it’s not “growth” per sé, but a shift of consumer behaviours maybe?

End of comments.

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