Lower food inflation, strikes and currency devaluation hit Shoprite sales

Shoprite says low internal food inflation at SA supermarkets and currency devaluation in other African markets where it operates hit sales in the quarter ending September 2018, with the group managing a 0.4% increase in turnover.

Internal food inflation in SA stores - which accounts for the majority of the group's business - was -0.1% for the quarter. More than 11 607 items in September remained cheaper than they were a year ago, Shoprite said. 

Meanwhile "sharp devaluations" of the currencies of Angola and Zambia contributed to a 8.6% slump in turnover, in rand terms, from the group's operations in the rest of Africa. 

"The Angola kwanza and Zambia kwacha have depreciated by 76.3% and 21.0% respectively against the US dollar since the beginning of 2018," the company, which is Africa's largest food retailer, said in an operational update statement.

"The group’s hedging strategy continues to soften the blow of forex challenges caused by weakening African currencies," it said.

The retailer noted that its core customer base of the local Shoprite chain remained under pressure from rising transport costs and unemployment, and the retailer did not rule out the prospect of food price inflation in the next few months.

While Shoprite experienced relative consumer strain, Checkers continued to register growth.

Local sales were also affected by a six-week service provider strike which accounts for 53% of total centralised food distribution in the country. Some stores were unable to meet demand due to the lengthy labour action, something the retailer says benefited some of its competitors.

A total of 15 supermarkets opened in the quarter and a further 41 will be added before the end of December 2018, the retailer said.