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Shoprite gears up to take on Walmart

Johannesburg - Shoprite Holdings [JSE:SHP], Africa's biggest grocery retailer, is spending R3bn on the upgrading and expansion of its distribution centres, the company's deputy managing director Carel Goosen said on Tuesday.

The company's CEO had earlier said that Shoprite would open 24 new stores by June next year on the back of increased competition in the sector.

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

“We think that we can face competition with comfort,” Whitey Basson, Shoprite’s chief executive said at the company’s results presentation.
“So we won’t stand here and say: ’We don’t expect competition’. But we ... will try, and probably succeed in maintaining these sorts of growth rates.”

It 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 earlier 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.
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