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SHOPRITE HOLDINGS LIMITED - Operational update

Release Date: 30/10/2017 09:45
Code(s): SHP     PDF:  
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Operational update

SHOPRITE HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Reg. No. 1936/007721/06
ISIN: ZAE000012084
JSE Share code: SHP
NSX Share code: SRH
LuSE Share code: SHOPRITE
(“Shoprite Holdings” or “the Group”)

OPERATIONAL UPDATE

In the three months to September 2017, the Shoprite Group delivered an increase in
turnover of 6.4%, marking the 65th consecutive quarter of growth for the company.

RSA Supermarkets, the Group’s primary business, grew sales by 8.1% during a period
which saw a sharp reduction in internal inflation, decreasing to only 0.9% for the
quarter from the corresponding quarter’s 7.2%. This material drop was driven by
significant price reductions of many basic commodity items such as maize meal and
potatoes following supply improvements after the earlier drought conditions.

Stripping out the effect of inflation, the real sales growth surpassed the prior year’s
growth in the same quarter, which is a considerable achievement. The core customer
base of its Shoprite chain in particular remained under pressure from rising costs and
unemployment, but the Group managed to overcome this through strong price
leadership and successful promotions, achieving further market share gains in the
quarter.

Facing many economic headwinds, the Group’s Non-RSA Supermarkets reported a
negative turnover growth of -1.8% mainly due to the impact of lower commodity prices
and the depreciation of the currencies of the three main countries where the Group
trades on the continent. Sales growth in Angola, in particular, slowed significantly after
extraordinary growth of 110% in the corresponding quarter.

The smaller divisions also made a good contribution to Group turnover. The Furniture
division, whilst continuing to labour under the effect of the amendments to the National
Credit Act, reported increased sales of 8.9%. The OK Franchise division continues to
gain market share and saw a growth of 10.0%, in line with the Group’s supermarket
performance.

Store openings are continuing as planned with 20 supermarkets and 6 furniture stores
opened during this quarter.

The current pace of growth echoes the prevailing challenging trading environment and
must be viewed in context of the very strong growth of 15.7% in the corresponding
period of the prior year.

The deflationary environment is good news for consumers ahead of the important
festive sales season, although consumer spending is difficult to predict, especially with
further Rand weakness. In the medium term, however the Group remains optimistic
about its operational strength and is making positive progress on its strategic priorities.

Pieter Engelbrecht           Marius Bosman
Chief Executive              Chief Financial Officer
Tel 021 980 4000             Tel 021 980 4000

Date issued:                 30 October 2017

Sponsor:                     Nedbank Corporate and Investment Banking

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