Shoprite boosts first-half profit

Johannesburg - Africa’s biggest food retailer Shoprite Holdings [JSE:SHP] reported an 18.6% rise in first-half profit on Tuesday, helped by higher prices, a favourable exchange rate and above-inflation wage increases for consumers in its main South African market.

Shoprite, which runs discount chains, said headline earnings per share totalled 280.8 cents in the six months to end-December compared with 236.8c a year earlier.

The results support data showing that consumer spending is improving in Africa’s biggest economy due to decades-low interest rates and above-inflation wage hikes for workers in several sectors, but the outlook is uncertain due to high personal debt levels and unemployment.

South African retail sales jumped 8.7% year-on-year in December, from an upwardly revised 7.2% growth in November and beating a 6.5% slowdown economists had expected.

Shoprite, a domestic merchant seen likely to lose the most from discounter Walmart’s entry into the country, has also benefited from store expansion at home and across the continent.

Walmart and its 51%-owned unit Massmart Holdings [JSE:MSM] are also due to report their results this week.

Shoprite said sales rose 13.2% to R41bn after increasing prices by an average of 4.6% and gaining nearly R30m from favourable currency swings.

Shares in Shoprite, which operates in other African countries including Nigeria, Angola and Zambia, inched up 0.73%  to R133.65 by 07:44 GMT.

The company’s stock has fallen more than 2% so far this year, lagging behind a 7% rise in the Top 40 - (Tradeable) [JSE:J200] index and reflecting views that domestic retailers are overvalued.