Poor performance outside SA sees Shoprite earnings drop

Retailer Shoprite says although its non-South African operations underperformed over the past financial year, they are still a substantial contributor to the group.

The group on Tuesday released the financial results for the year ended July 1, 2018 and reported a decline in earnings. According to the results, diluted headline earnings per share are down 3.8% to 968.7c.

Net profit for the year was R5.2bn. Trading profit was down 1.4% to R8bn, compared to R8.13bn reported in 2017.

The group declared a dividend of 279 cents per share, bringing the total dividend for the year to 484c – compared to 504c reported last year.

Overall turnover increased 3.1% to R145.3bn, it was negatively affected by hyperinflation in Angola, CEO Pieter Engelbrecht said. Excluding the adjustment turnover would have grown by 3.6%.

Turnover in non-SA markets declined by 7%, this after "exceptional growth" in the previous year. This is mainly due to slow economic recoveries and currency fluctuations, Engelbrecht explained.

The group also indicated that trading in Nigeria was impacted by the foreign exchange fluctuations. However, Nigerian stores are showing growth in local currency.

Continuing pressure

The group anticipates sales in non-SA markets will remain under pressure. "We expect continued currency weakness and foreign exchange shortages.

"Operations in the rest of Africa remain a substantial contributor to the group and on [their] own stand tall relative to various local peers," Engelbrecht said.

Locally, South African market operations managed to increase turnover by 5.7%, this is despite deflation in selling prices for six out of the twelve months in the year, said Engelbrecht.

"The strong RSA performance amidst low inflation still resulted in a market share gain to 31.7% for the period," said Engelbrecht.

South African operations experienced customer growth in terms of customer numbers and trips to stores, as well as the volumes of products sold, which helped "mask the effects of deflation and cost pressure".

During the period, the retailer opened a net of 124 corporate stores, up from 109 reported in 2017, and created over 3 600 jobs.

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