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SA retailer Shoprite Group shines on the JSE following strong sales despite unrest and alcohol ban challenges

Shoprite shares closed nearly 7 percent higher on the JSE yesterday at R197.80 after recording bumper sales during the quarter ended September 2021 underscoring the effectiveness of its low-price strategy and diversification of revenue streams. Photo: Simphiwe Mbokazi/African News Agency (ANA)

Shoprite shares closed nearly 7 percent higher on the JSE yesterday at R197.80 after recording bumper sales during the quarter ended September 2021 underscoring the effectiveness of its low-price strategy and diversification of revenue streams. Photo: Simphiwe Mbokazi/African News Agency (ANA)

Published Nov 16, 2021

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SHOPRITE shares closed nearly 7 percent higher on the JSE yesterday at R197.80 after recording bumper sales during the quarter ended September 2021 underscoring the effectiveness of its low-price strategy and diversification of revenue streams.

Group sales were 9.2 percent while the Supermarkets RSA sales surged by 11.6 percent during the quarter under review despite the double whammy of the civil unrest and the ban on liquor sales.

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The Supermarkets RSA segment that makes up around 80 percent of sales from continuing operations comprising USave, Shoprite, Checkers and Checkers Hyper stores grew market share over the quarter.

Shoprite said the internal selling price inflation for the quarter measured 3.3 percent, virtually unchanged from the 3.4 percent posted for the group’s second half-year period to June 2021. Shoprite, whose bread subsidy programme sold 72.8 million loaves of R5 in its house bakery bread during the 2021 financial year, said the mandatory closure of the RSA Supermarket segment had a negative effect on its LiquorShop business.

“Due to Covid-19 lockdown regulations LiqourShop was not able to trade for 48 of the 91 days in the quarter down from the 60 days closed in the prior year,” said Shoprite.

The mayhem in July in KwaZulu-Natal and parts of Gauteng also resulted in 135 RSA supermarkets and 54 RSA LiquorShops being severely impacted due to looting and or fire damage, said the group.

It estimated the book value of the damage to property, fixtures and fittings, stock and fleet to be R1.25 billion as a result of the civil unrest.

“Shoprite has Sasria (South African Special Risks Insurance Association) cover in place to the value of R1.5bn and we can confirm to date that an initial R500 million payment was received from Sasria in September 2021,” said Shoprite.

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Shoprite said at the end of the quarter, 47 stores extensively damaged by fire and/or looting in the riots remained closed. Of these, 17 were expected to open by June next year.

The group said the remaining 30 stores were mostly LiquorShops, Usaves and Shoprites – in that order – and two Checkers Hyper stores. “Of these six will not reopen and the remaining 24 stores will take longer and some may require relocation,” said Shoprite.

The group’s furniture business recorded a 10.5 percent decline in sales during the quarter partly due to the higher base in which sales grew by 20.6 percent over the same period last year, “but also a consequence of the impact of the July 2021 civil unrest“.

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The civil unrest resulted in 35 stores being closed due to severe damage, and a considerable number of adjacent stores in the impacted regions being closed during July for precautionary reasons 11 remain closed, said Shoprite.

Christele Chokossa, a senior analyst at Euromonitor International, said the company’s decision to re-prioritiSe the South African market was slowly

paying off, with improved penetration through new stores and acquisition, as well as the expansion of loyalty programmes likely to continue supporting growth going forward.

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“Also, diversification in portfolio seems to remain one of Shoprite’s strongest points, because the group can conveniently address demand from higher income groups who tend to be more resilient, through ’premiumisation’ and digitalisation, while also

expanding value offerings and access to lower income groups whose disposable income is steadily recovering from pandemic,” Chokossa said.

Shoprite, which launched K’nect mobile, its own mobile virtual network operator earlier this year yesterday launched LiqourShop online liquor store selling more than 3 000 drinks and accessories at supermarket prices, with nationwide home delivery.

Shoprite said shoppers living in Gauteng or the Western Cape would receive free delivery for orders of more than R450. “A delivery fee of R75 will apply to orders less than this. In other areas, a delivery fee of R150 applies to orders of less than R1 000,” said Shoprite.

Shoprite concluded the sale of its Nigerian supermarket business to Persianas, a local retail property group during the 2021 financial year and also closed the operations in Kenya.

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