Africa’s retailing giant Shoprite Group reported a muted 3.3% growth in turnover to R145.6 billion during the year ended June in what reflects difficult economic conditions across its markets.
These financial update comes amidst continued economic struggles across the African continent as caused by the collapse of commodity prices and local currencies in the past few years. Shoprite is exposed to markets like Nigeria, Angola and Mozambique which have been hit hard by the receding commodity crisis.
Shoprite management said the group’s core business, Supermarkets RSA, performed well. The South African operation achieved 5.7% sales growth.
Management added that operations outside South Africa recorded negative turnover growth of 7% in Rand terms which impacted overall Group sales performance. “The slower Non-RSA sales is mainly attributed to the normalised performance of the Angolan operation following the 65.9% compound growth in turnover over the prior two years and the 50.2% devaluation of the Angolan Kwanza since January 2018.
“Excluding Angola, Supermarkets Non-RSA managed to achieve a positive sales growth of 3.0%. A significant drop off in Supermarkets Non-RSA internal inflation from 14.4% in the previous year to only 1.1% for the current year was also experienced.”
The group reported that its furniture division increased sales by 9.9%. And other operating segment; OK Franchise, Medirite Pharmacy and Checkers Food Services; achieved growth of 5.2%.
Looking ahead management said despite the demanding trading environment, exasperated by the sharp decline in internal inflation, the Group remains positive about its operational strength, customer support for its brands and is making progress on its strategic priorities.
The update spooked investors who pushed Shoprite share price down by 3.7% to close at R212.30.