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Shoprite sees half-year profits growing by up to 22.5%

Compared with the same period a year ago.
Image: Dean Hutton/Bloomberg

Shoprite said on Monday its profits for the half year that ended December 27 will be higher by between 12.5% and 22.5% compared with the same period a year ago.

Adjusted basic headline earnings per share (HEPS) – the main measure of corporate profit in South Africa – will be between 400.1 cents ($0.2762) and 435.7 cents, the company said, driven mainly by sales in its local market.

Home market sales, which account for over three quarters of the company’s total sales, grew by 5.6% for the half year, said Shoprite, the country’s largest retailer by market capitalisation.

The biggest sales driver was Shoprite’s furniture business, comprising OK Furniture and House & Home, where sales increased by 15.7% from the year ago period.

South African retailers, suffering even before the coronavirus had hit the country, got a fresh lease of life last year when consumers showed a renewed interest in furniture and home ware products as people started spending more time at home.

Shoprite did not say if the trend was sustainable.

Sales from Checkers and Checkers Hyper – Shoprite’s retail outlets aimed at bigger cities – reported sales growth of 11.1%., the company said.

Shoprite will announce first-half results on March 16.

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and the share price hardly moves …

the same results applied to Clicks, PNP, Spar, Mr. Price or Woollies would have resulted in a 5% jump

Maybe it has something to do with the range in profitability – I wonder why they are so uncertain. Your comparison to other large retailers has some misconceptions – Spar is only food, PnP food and clothing and some big ticket items, and Clicks is in a total different market

Shoprite/Checkers turnover > PNP + Spar.
Accounts for over 31% of all retail sales in SA, yet the share price has been a non-performer in the last 12 months.
Looks similar to SBK share price performance.

Massmart is a better buy than Shoprite, up nearly 10% in one day.

Someone please explain to me how their profit go up by 22.5%, when inflation is 3.3%. It’s not increased sales; it’s increased margins. It’s not on furniture, it’s on food. The furniture story is an eye-blind. To me it is criminal that food prices keep going up in multiples, despite the plight of many, many South Africans who lost jobs during the pandemic. You have to be a special kind of heartless to extort more profits from an overwhelmed population, on vitals such as food.

End of comments.

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