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South Africa’s largest retailer Shoprite reported on Tuesday (September 8) a healthy rise in its key market for the 52 weeks to June 28, 2020, despite significant Covid-19 lockdown restrictions affecting To the group.
“Our main operating segment of Supermarkets RSA increased sales by 8.7%, representing an increase from R9.8 billion to R122.4 billion. Sales from our continuing Non-RSA Supermarkets operations decreased 1.4% in rand terms, however increased 6.6% in constant currency terms, ”said CEO Pieter Engelbrecht.
Performance highlights:
- Merchandise sales increased 6.4% to a record R156.9 billion;
- Excluding the impact of hyperinflation, business profits increased by 10.4% to R8.3 billion;
- Total diluted earnings per share (DHEPS) increased 2.5% to 765.8 cents;
- Adjusted DHEPS increased 16.6% to 717.5 cents;
- The full-year dividend, in line with the 2x DHEPS Hedging Group policy, increased by 20.1% to 383 cents;
Shoprite said it opened a total of 147 stores comprising 101 corporate and 46 franchise stores during the period.
The group’s core business, Supermarkets RSA, which accounts for 78% of the group’s sales, is represented by 1,638 stores in our main trademarks Shoprite, Usave, Checkers, Checkers Hyper and LiquorShop.
As a segment, Supermarkets RSA achieved sales growth of 8.7% and in like-for-like terms increased sales by 6.8%. Sales for the second semester grew 7.5%. Second-half domestic inflation of 3.4% increased from 2.7% for the first six months to an average of 3.0% for the year, Shoprite said.
The two weeks prior to South Africa’s initial 35-day Level 5 lockdown resulted in high sales growth across all three of our supermarkets, but noteworthy is the significant growth reported by our mid-to-high level Checkers business. repositioned (including Checkers Hyper) which now represents 39.6% of local sales.
The Checkers supermarket chain, which includes 37 larger-format Hypers Checkers, increased merchandise sales by 13.5%. “Checkers’s strategy to increase its share of spending in the mid-to-high segment of the market continues to underpin the chain’s growth. Checkers, including Checkers Hyper, now operate out of 261 stores in South Africa, ”the group said.
Of this, the number of stores in the Checkers FreshX format has risen to 28 from 21 stores the previous year, he said.
Shoprite increased sales by 5.5%, adding 6 net new stores to its base by the end of June 2020 with 503 stores. Usave increased sales by 16.5%, adding 14 net new stores to end the reporting period with 374 stores.
The group’s liquor business, represented by Shoprite LiquorShop and Checkers LiquorShop, the first-half sales growth momentum continued in February and accelerated, prior to closing, during March.
The Covid-19 lockdown regulations required the complete shutdown of our liquor business for 66 days and subsequently restricted trade to four days a week (Monday through Thursday) during the month of June.
The combination of a sales growth of 20.5% in the first half followed by a decrease in sales of 29.5% in the second half resulted in a decrease in sales of 3.3% for the year. LiquorShop represents 5.8% of RSA Supermarkets sales, he said.
Looking ahead, Shoprite said it has “considerable project work to catch up on” due to the shutdown. In total, including our 2020 catch-up, we budget to spend an estimated R4.8 billion on capital expenditures with approximately 95% of the amount related to our RSA operations. ”
Taking into account limitations on trading in certain segments due to existing lockdown regulations, the group said it has exceeded expectations since early July to date.
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