Shoprite lifts first-half profit

Johannesburg - Shoprite Holdings [JSE:SHP], Africa's biggest grocer, reported a 12.5% rise in first-half profit, helped by a robust performance from its stores outside its mainstay South African market.

Shoprite, which also runs stores in several other African countries, said headline earnings per share totalled 316 cents in the six months to end-December compared with 280.8 cents a year earlier.

Sales rose 13.8% to R46.7bn, boosted by 28.2% sales growth in supermarkets outside South Africa and a weaker rand.

But shares in Shoprite, which have dropped by about 14% so far this year, skidded 2.7% to R173.28 by 07:25 GMT as profit growth fail to justify high multiples.

The stock would have to fall by a another 5% to meet what Thomson Reuters StarMine estimates as a level that justifies Shoprite's expected growth.

After more than two years as investors' darlings, South African retailers are falling out favour on growing concerns about the strength of debt-fuelled consumer spending.

Shoprite said it would be able to main its current growth and profitability in the second half thanks to aggressive new store openings and a cost-efficient supply chain.