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Minister of Cooperative Governance and Traditional Affairs Des Van Rooyen. Picture Credit: Gallo Images
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Shoprite group 'well placed' to weather slump

By Adele Shevel | Aug 26, 2009 | COMMENTS [ 0 ]

SHOPRITE Holdings chief executive Whitey Basson expects trading conditions to become more difficult - and job losses to increase in South Africa - as more small businesses exit the market.

Weakened consumer spending, higher electricity tariffs and local government taxes will continue to increase business costs, but Basson said the Shoprite Group was better placed than most to weather the storm.

The group continues to grow market share at the expense of some competitors, and grew 1,5percent in the year to 30percent, the biggest gain by any food retailer. But Basson said Shoprite would not pursue "unprofitable market share".

The strong growth meant a further 11000 staff members were brought on board during this period.

The results were in line with analysts' expectations.

In the year ended June, total turnover rose 24,5percent to R59,3billion on the back of strong performances from all the group's divisions - while costs grew at a slower rate than turnover.

All divisions, except furniture, produced turnover growth in excess of 20percent.

To stimulate sales management continued to lower gross margins. The result was that sales grew at a faster rate than the group's cost base, yielding a 28,1percent improvement in trading profit and an increased trading margin from 4,82percent to 4,96percent.

The group's supermarket operation in South Africa, which includes the Shoprite, Checkers and Usave brands, generated 78,5percent of total turnover.

Sales rose 22,8percent to R46,5billion in spite of a weaker second half.

Shoprite, the group's largest chain with 310 supermarkets in South Africa, increased turnover by 20,9percent to R27,1 billion.

The non-South African businesses contributed 13,7percent to total turnover.


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