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Steinhoff won't hamper Shoprite success - CEO

Aug 22 2017 19:01
Carin Smith

Pieter Engelbrecht Shoprite CEO.

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Cape Town - There should be no fears that Steinhoff will interfere with management at the Shoprite Group, Shoprite CEO Pieter Engelbrecht told Fin24 on Tuesday.

He said certain people have raised concerns that the Shoprite Group will not perform as well in future, due to possible interference in management by Steinhoff.

"This will not be the case. At Shoprite Group we are used to having a controlling shareholder. So with Steinhoff we will still function with a controlling shareholder. We remain committed to create value for our shareholders," he said after a presentation of the group's latest results at its new giant distribution center in Cape Town.

Earlier in August Fin24 reported that Steinhoff's merger plans with Shoprite may have fallen through, but the international retail holding company still plans to acquire a stake in the retailer through its African business unit.

Steinhoff International announced to shareholders that the listing of its African retail business on the JSE should be completed by the end of September. The listing of the holding company, Steinhoff African Retail Limited (STAR) was established on July 1.

STAR is expected to be part of the JSE Top 40 and the MSCI Emerging Market Index. STAR owns all of the African retail assets. These include Pep, Ackermans, the JD Group which includes Russells, Bradlows, Rochester, Incredible Connection and Hi-Fi Corporation and Tekkie Town, among others.

Steinhoff announced that STAR plans to acquire a controlling stake in Shoprite. This would apparently be done through call option agreements with, among others, a company ultimately controlled by a family trust of Shoprite group chair Christo Wiese. A mandatory offer to Shoprite’s remaining shareholders could then be avoided.

READ: Steinhoff in renewed bid for R35.5bn stake in Shoprite

Whitey Basson

Former Shoprite CEO Whitey Basson, who also attended the results presentation, told Fin24 that the latest results are "nice".

"The challenge for the group would, however, be to keep the pace of the business steady without losing discipline," Basson said.

He said current CEO Pieter Engelbrecht has not changed much on the executive side of the business, but mainly brought in more younger people. In Basson's view the group's executive is now has about 20% more younger executives.

Group chair Christo Wiese said at the presentation that people with vision are needed to make things come together.

"At Shoprite we have that vision and we remain proudly South African," Wiese said. "We can claim to be a world class company and I am most proud of the more than 6 000 jobs we created during the latest financial year. Whitey created a solid foundation and Pieter will take if forward to the next phase of development."

READ: Shoprite resilient despite rand, recession woes


Engelbrecht said since the Fifa Soccer World Cup in South Africa in 2010, the Shoprite Group has created about 55 000 new jobs. He said there are no retrenchments at the group.

In answer to a Twitter question by a Fin24 reader regarding the use of "casual workers", Engelbrecht said a retailer needs flexibility in order to meet consumer demands - for instance having longer trading hours.

"There is no such thing as casual workers in SA anymore. We have some workers contracted to work a certain number of hours, for instance," he explained.

The group's chief financial officer Marius Bosman said sales growth is the name of the game for the Shoprite group and Checkers was once again "the star of the show".

He is also happy with the excellent shrinkage results - the best in the history of the company. Furthermore, the group has increased its security costs to ensure customers' safety - especially when SASSA payouts are being made. Customer complaints have been reduced by 35%.

He pointed out that the House & Home division remains "a problem", but that the group has some plans in this regard. At the same time the group's liquor chain is growing fast and Hungry Lion has taken a positive turn.

READ: Billionaire Wiese’s long walk to Shoprite/Steinhoff merger

Customer focus

"We have a relentless focus on customers. Consumers will leave your stores if you do not remain relevant. We have between 35 million and 36 million customers per month and have manged to grow it by 4.5%," said Engelbrecht. "We are also one of the few retailers growing our supplier volumes."

He said Checkers grew its upmarket share of that market segment, but he added that he never said Checkers wants to "become Woolworths". At the same time, he said, the group is managing to "dismantle" what it sees as a "monopoly" in the premium food trade in SA.

As for its business in the rest of Africa, Engelbrecht said the group will continue to expand on the continent and "stay true to its African heritage".

At the same time it is also looking at potential in Eastern Europe and Engelbrecht recently visited Poland in this regard.


Shoprite Holdings saw an increase in trading profit 11.6% to R8bn compared to the previous financial year. Diluted headline earnings per share rose 11.9% - from 900.3 cents to 1 007.4c.

Earnings before interest, tax, depreciation and amortisation (Ebitda) increased by 6.8% - from R9.4bn to R10bn.

The dividend per share declared was 504 cents - an increase of 11.5% over the 452c of the corresponding period.

By end of trade on Tuesday Shoprite's share price was up 7.98% at R217.04.

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