WOOLIES: 4,763 +80 (+1.71%)
S.African strike and Angola stifle Shoprite sales, shares fall
By Nqobile Dludla
JOHANNESBURG, Jan 22 (Reuters) - Supermarket operator and
furniture retailer Shoprite reported flat half-year
sales on Tuesday, held back by a strike at its largest
distribution centre in South Africa and sharp currency
devaluations elsewhere in Africa.
Shares in Shoprite, which owns more than 2,800 outlets
across Africa, fell more than 5 percent before paring loses to
trade down 2.84 percent at 180.72 rand at 0910 GMT.
Shoprite said turnover for the six months to Dec. 31 rose
just 0.03 percent to 72.9 billion rand ($5.24 billion).
Including the impact of an Angolan hyperinflation accounting
adjustment, group turnover slipped 0.01 percent.
Domestic peers department store operator Woolworths
and budget clothes retailer Mr Price Group last week
also reported slower sales growth.
Higher value-added tax, unemployment, inflation and fuel
prices have reduced spending power in South Africa.
"This was evidenced in Christmas sales in categories like
Back to School essentials which outperformed traditional
discretionary purchases such as toys for the first time,"
Adding to the sales pressure, it said product availability
challenges stemming from its group's largest distribution centre
in Gauteng province, which accounts for 53 percent of total
centralised food distribution for the South African supermarkets
businesses, affected sales in the period.
"Industrial action followed by the deployment of our new
warehousing system shortly after the labour disruption hampered
the ability to adequately meet demand which resulted in lost
sales opportunities, which the group was unable to recover," it
In the rest of Africa, it attributed the lower turnover
mainly to a reset of the sales performance of the Angolan
business, declining 44.95 percent in rand terms "after a
significant 85.13 percent devaluation of the Angolan kwanza to
the U.S. dollar since January 2018".
According to the group's 2018 integrated report, Angola is
the third largest operation in the rest of Africa based on the
number of stores.
Shoprite's core business supermarkets RSA reported sales
growth of 2.58 percent, while the non-RSA supermarkets division
reported a 13.27 percent decline in sales and furniture
increased sales by 4.30 percent.
($1 = 13.9058 rand)
(Reporting by Nqobile Dludla; editing by Emelia
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