Shoprite out-performs its competitors and ups profits

AFRICA'S largest retailer, Shoprite, has announced that annual sales rose 24,5 percent to about R59,3 billion for the 12 months ended June.

The group, which runs Shoprite and Checkers supermarkets, said yesterday growth on a like-for-like basis stood at 19,1percent. Internal food inflation rose to 15,8 percent compared with 10,6percent during the previous 12 months.

Analysts said the group was gaining market share from competitors. Syd Vianello of Nedcor Securities said big retail brands were making inroads into traditional markets serviced by wholesalers.

Vianello said even without food inflation Shoprite was performing way ahead of its competitors.

Turnover growth at Shoprite slowed in the second half of the year to 21,8 percent from 27,3percent. Management said this was due to increasing pressure on the disposable income of consumers and lower internal inflation which reduced from 16,9 percent in the first six months to 14,7 percent in the second.

The South African supermarket division, the core business of the group, increased sales by 22,8 percent. The division continued to cut margins on basic foodstuffs to alleviate the impact of food price increases on consumers.

The 102 supermarkets outside of South Africa, most of which are in Africa, grew turnover by 39,9percent compared with the previous year. The growth was 36,7percent on a like-for-like basis.

Slower growth in the second half was due to the strengthening of the rand against other currencies.

The group's furniture division grew turnover by 13,9 percent in a relatively low inflationary environment.

Earlier this week Massmart, the country's largest food and goods wholesaler, posted a 10,4 percent increase in a 52-week sales period driven by higher prices and adjusted to exclude an extra week from the previous year.