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Johannesburg - South Africa’s biggest food retailer Shoprite Holdings [JSE:SHP] is likely to miss full-year sales forecasts, it said on Monday, sending its shares down more than 2% and underscoring growing worries that a recovery in consumer spending does not match high valuation multiples.
Shoprite, which runs discount grocery stores, said total sales grew 7.3% to about R72.3bn. A Thomson Reuters poll of seven analysts expected the company’s revenue to total R74.4bn.
Shares in the company fell 2.26% to R101.80 after the update.
Consumer demand is recovering in South Africa after a contraction in 2009, helped by 650 basis points of interest rates cuts since 2008 that left borrowing costs at historic lows. However, analysts and fund mangers have said the recovery has not been enough to justify high valuation multiples.
Shoprite said sales growth was achieved on internal food inflation that averaged minus 0.1%. The company’s mainstay South African business increased sales by 7.2%, while its 114 supermarkets that operate in the rest of the continent lifted sales by 2.1% in rand currency terms.
The group furniture unit grew turnover by 1.9%, underscoring high personal debt levels in South Africa.
Shoprite, which runs discount grocery stores, said total sales grew 7.3% to about R72.3bn. A Thomson Reuters poll of seven analysts expected the company’s revenue to total R74.4bn.
Shares in the company fell 2.26% to R101.80 after the update.
Consumer demand is recovering in South Africa after a contraction in 2009, helped by 650 basis points of interest rates cuts since 2008 that left borrowing costs at historic lows. However, analysts and fund mangers have said the recovery has not been enough to justify high valuation multiples.
Shoprite said sales growth was achieved on internal food inflation that averaged minus 0.1%. The company’s mainstay South African business increased sales by 7.2%, while its 114 supermarkets that operate in the rest of the continent lifted sales by 2.1% in rand currency terms.
The group furniture unit grew turnover by 1.9%, underscoring high personal debt levels in South Africa.
