Wrap Text
Operational update for the six months ended 1 January 2023
SHOPRITE HOLDINGS LIMITED
(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 for the six months ended 1 January 2023
For the six-month period to 1 January 2023 ("the period"), the Shoprite
Group increased total sale of merchandise by 16.8% to approximately
R106.3 billion.
The table below outlines the sales growth by operating segment:
Approximate sales from continuing operations
% Sales growth over the corresponding
restated period last year*
H1 H1 Q1 Q2
ended ended ended ended
1 Jan 2023 1 Jan 2023 2 Oct 2022 1 Jan 2023
Rbn % % %
Total Group
(including
Supermarkets RSA
LiquorShop) 106.3 16.8 18.6 15.2
Total Group
(excluding
Supermarkets RSA
LiquorShop) 99.0 15.6 15.9 15.3
By segment:
Supermarkets RSA
(including RSA
LiquorShop) 85.1 17.5 19.9 15.4
Supermarkets RSA
(excluding
RSA LiquorShop) 77.8 16.0 16.6 15.5
Supermarkets Non-RSA 10.0 17.5 19.1 16.2
Furniture 3.9 8.6 5.2 11.1
Other operating segments 7.3 12.5 10.8 14.0
* Restated for the classification of the Group's DRC operations as
discontinued operations in accordance with IFRS 5: Non-current Assets
Held for Sale and Discontinued Operations.
The following information provides context to the overall sales growth for
the six months:
Supermarkets RSA
- The Group's core business, Supermarkets RSA, contributing 80.1% to Group
sales, achieved sales growth of 17.5% (like-for-like 11.1%). This growth
is reported against the six-month period ended 2 January 2022 ("first
half 2022") when sales increased by 11.3%.
- The growth in sales reflects a record Black Friday and festive season,
underpinning 46 months of uninterrupted market share gains.
- Internal selling price inflation for the period measured 9.4% reflecting
the Group's product mix exposure to commodities, where selling price
inflation has been notably higher.
- First quarter sales growth was supported by LiquorShop closures during
the first quarter last year whereas second quarter sales growth is
reported against a second quarter last year in which LiquorShop traded
for the whole period, unrestricted. Excluding LiquorShop, first quarter
sales increased by 16.6% and second quarter sales increased by 15.5%.
- Checkers and Checkers Hyper reported sales growth of 16.9%.
- Shoprite and Usave reported sales growth of 15.1%.
- Supermarkets RSA LiquorShop sales increased by 35.6%.
- As a result of our commitment to price leadership the Group invested in
selling prices to counter the impact of inflation for customers thereby
saving our Shoprite and Checkers Xtra Savings customers R7 billion
over the period. This together with the impact of the approximate
56% year-on-year increase in fuel price on our supply chain operations
will result in the segment reporting a marginally lower gross margin
for the period.
- Excluding the stores acquired from Massmart Holdings Ltd ("Massmart")
(which will be included in the stores opened in the second half of the
financial year) and social unrest store closures and reopenings,
Supermarkets RSA added a net 191 stores during the past 12 months to
total 1 953 stores.
Supermarkets Non-RSA
- In our reporting currency the Rand, Supermarkets Non-RSA's sales
increased by 17.5%, contributing 9.4% to Group sales.
- In constant currency, Supermarkets Non-RSA increased sales by 6.9%.
- Our three stores in the DRC were closed during the period and as such
the region has been classified as a discontinued operation.
- The segment's store base decreased by a net of five stores, three of
which were situated in DRC, over the past 12 months to end the period
with 227 stores.
Furniture
- The Group's Furniture segment, made up of OK Furniture, OK Power Express
and House & Home, reported an increase in sales of 8.6% (like-for-like
5.0%). The segment contributes 3.7% to Group sales.
- Outside of the social unrest closures and reopenings, the segment's
store base increased by six stores on a net basis over the 12 month
period to close with 432 stores.
Other operating segments
- The Group's Other operating segments, comprising OK Franchise,
Transpharm, Medirite Pharmacies, Checkers Food Services and Computicket,
reported sales growth of 12.5%. The segment makes up 6.8% of Group sales.
- The Group's sales to its OK Franchise operation increased by 13.8%.
The OK Franchise store base increased by a net of 24 over the 12 months,
to end the period with 535 stores.
Additional comments
Whilst the Group is encouraged by continued customer growth and ongoing
market share gains, we highlight the following for their impact during the
period:
1. A notable increase in employee costs attributable to the Group's
across-the-board increase in its minimum wage and the establishment
of the Shoprite Employee Trust. Neither of these initiatives were in
place during the first half 2022 and no Covid-19 or social unrest
related employee incentives were received from Government during the
period (R193 million received during first half 2022).
2. The Group's additional spend on diesel to operate generators across our
Supermarkets RSA store base in order to trade uninterrupted during
loadshedding stages five and six amounted to R560 million for the
period.
3. The Group received an insurance claim relating to loss of profits of
approximately R245 million during the period, however this receipt will
be somewhat offset by the R90 million increased cost of insurance cover
during this period as a result of the Group's decision to take
additional insurance cover above that offered by Sasria at this time.
Update on acquisition of select stores and businesses from Massmart
As an update to the 12 December 2022 announcement of the Group's purchase
of select stores and businesses from Massmart, we are pleased to report that
all the acquired stores have been successfully integrated into our core
South African supermarket operations and rebranded as follows - 82 Shoprite
and Shoprite LiquorShops, 11 Cash and Carry stores, one Usave.
In terms of timing, the acquisition is effective from 9 January 2023 and as
such will only reflect in our second half 2023 results.
Impact of the Group's pro forma constant currency disclosure
The Group discloses unaudited constant currency information to indicate the
Supermarkets Non-RSA operating segment's performance in terms of sales
growth, excluding the effect of foreign currency fluctuations. To present
this information, this period sales for entities reporting in currencies
other than South Africa rand are converted from local currency actuals into
South Africa rand at the prior period's actual average exchange rates on a
country-by-country basis.
The table below sets out the percentage change in sales, based on the actual
results for the period, in reported currency and constant currency for the
following major currencies. The total impact on Supermarkets Non-RSA is
also reflected after consolidating all currencies in this segment.
Reported Constant
% Change in sales on prior period 26 weeks currency currency
Angola kwanza 36.9 (12.1)
Mozambique metical 24.5 7.9
Zambia kwacha 29.7 2.0
Supermarkets Non-RSA including discontinued operations 17.1 6.5
Supermarkets Non-RSA continuing operations 17.5 6.9
Statement on pro forma financial information
The pro forma financial information contained in this announcement, which
is the responsibility of the Group's Directors, has been prepared for
illustrative purposes only and may not fairly present the Group's financial
position, changes in equity, cash flows or results of operations.
The information contained in this announcement has not been reviewed or
reported on by the Group's external auditors.
Group interim results release, webcast presentation invitation and
registration link
Shoprite Holdings is currently in its closed period and will release its
2023 interim results for the period ended 1 January 2023 on the JSE Stock
Exchange News Service (SENS) by 08:00 on Tuesday, 7 March 2023.
The Group's interim results webcast presentation will commence at 09:30 on
7 March 2023.
Shoprite Holdings' CEO Mr Pieter Engelbrecht invites all who would like
to attend the webcast presentation to do so by registering via the Group's
website www.shopriteholdings.co.za or alternatively via
https://www.corpcam.com/shoprite07032023.
31 January 2023
Cape Town
Sponsor: Nedbank Corporate and Investment Banking, a division of
Nedbank Limited
Enquiries
Shoprite Holdings Limited Tel: 021 980 4000
Pieter Engelbrecht - Chief Executive Officer
Anton de Bruyn - Chief Financial Officer
Natasha Moolman - Group Investor Relations
Date: 31-01-2023 08:00:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
