Shoprite beats profit expectations

Johannesburg - Shoprite Holdings [JSE:SHP], Africa's biggest grocery retailer, beat analysts' estimates with a 12.4% rise in full-year profit, as lower interest rates and a tentative economic recovery boost consumer spending.

Shoprite, which runs discount stores of the same name and the more upscale chain Checkers, said on Tuesday diluted headline earnings per share (Heps) totalled 507.6c in the year to end June from 451.6c a year earlier.

Analysts on average had expected Heps to come in at 498.3c, according to a Thomson Reuters poll of 12 analysts.

While South African food merchants sold more products in the past year thanks to lower interest rates and a slow recovery in consumer spending, items have been sold at bargain prices.

Shoprite said its internal food inflation on average was flat during the period, compared with a 2.25 rise a year earlier.

The company, one of the retailers seen likely to lose from Walmart's entry into South Africa, said while prices are expected to rise in the coming fiscal year, they will be kept in check by intensified competition.

South African retailers are gearing up to take on the world's biggest retailer, which took a 51% stake in Massmart Holdings [JSE:MSM] and said it would expand the local retailer's food retailing business.

"Competition is expected to further intensify. However, we believe the group is well equipped to deal with the challenges that will confront it in the new financial year," Shoprite said.

Its share price was little changed early on Tuesday, trading 0.19% lower compared to a 1.1% rise in the blue chip Top 40 - (Tradeable) [JSE:J200].