SHOPRIT: 16,317 +477 (+3.01%)
South Africa's Shoprite logs first annual profit drop in 19 years
* Headline EPS down 3.8 pct, first drop since 1999
* Angola currency devaluation weighs
* Share price tumbles to one-year low
(Adds shares, dividend, CEO quote)
By Nqobile Dludla
JOHANNESBURG, Aug 21 (Reuters) - Africa's biggest grocer
Shoprite reported its first annual earnings decline in
19 years on Tuesday, due to a currency devaluation in Angola and
a lacklustre showing in its home South African market and
elsewhere on the continent.
South African retailers have struggled to lift earnings as
elevated household debts, higher fuel prices and an increase in
value-added tax squeeze consumer income.
But Shoprite, which has extensive operations elsewhere on
the continent, took another hit this year as key markets in
Angola and Nigeria battle chronic foreign exchange shortages and
tepid economic growth.
Shares in Shoprite tumbled more than 7 percent to a level
last seen in August last year. At 1148 GMT shares were down 6.44
percent, on track for their worst daily fall since December
Chief Executive Pieter Engelbrecht told a results
presentation it was probably "the toughest (year) that I can
A listeria outbreak, blamed on a tainted meat product, that
forced Shoprite to conduct its largest ever product recall, two
strikes over pay and 489 armed robberies at its stores sapped
turnover growth, Engelbrecht said.
The Cape Town-based retailer said diluted headline earnings
per share (EPS) for the year ended July fell by 3.8 percent to
That compares with a predicted 8.2 percent increase, or
1,090 cents, estimated in a poll of 10 analysts by Thomson
The company last reported a decline in diluted headline EPS
in its financial year ending in 1999. Diluted headline EPS, the
most widely watched profit gauge in South Africa, strips out
certain one-off items.
Shoprite, which targets lower-income consumers with
discounts on staples such as maize meal and potatoes, slashed
its final dividend by 14 percent to 279 cents per share.
"The fact that they cut the dividend, I suppose the market
is saying the consumer looks like it's under more pressure than
they realised and it's quite a disappointing set of earnings,"
said Greg Davies, an equities trader with Cratos Capital.
Trading in Nigeria continues to be hampered by foreign
exchange fluctuations which have limited imports and therefore
ranges in stores, while in Angola, Shoprite's biggest market
outside South Africa, the currency has lost more than half its
value against the U.S. dollar since December 2017.
This weighed on its non-South Africa operations, which
recorded a decline in sales of 7 percent, while its local
division reported turnover growth of 5.7 percent.
Sales rose 3.1 percent to 145.3 billion rand ($9.9 billion).
Rest of Africa operations contribute 18 percent to group sales.
"Non-RSA (Republic of South Africa) is still profitable,
it's not a crisis," Engelbrecht said, adding that the grocery
chain store remains committed to Africa as shown by its recent
bid for 11 franchise stores in Botswana.
"It (the process) is still under arbitration and we should
have an answer at the end of the calendar year," Engelbrecht
($1 = 14.6363 rand)
(Reporting by Nqobile Dludla
Editing by Edmund Blair and Adrian Croft)
First Published: 2018-08-21 08:57:52
Updated 2018-08-21 15:18:30
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