Shoprite reported a 17 percent jump in full-year profit despite commodity crunch

By TJ Strydom

JOHANNESBURG (Reuters) – Africa’s largest retailer Shoprite Holdings reported a 17 percent jump in full-year profit on Tuesday, shrugging off competition in South Africa and buoyed by strong sales in Angola.

Its thrifty stores helped it secure a South African market share of 32.8 percent in June, a company record, Chief Executive Whitey Basson said, as the chain kept costs tight and subsidised certain basic foodstuffs to keep the business of cash-strapped consumers.

Africa’s most advanced economy, which accounts for four fifths of the company’s sales, is forecast by the central bank to show zero growth this year, but Basson still sees room for growth for the company.

“We are not worried about the South African market maturing,” he said in a webcast after pointing out that Shoprite had opened a net 49 stores in 2016 in its home market and was planning to open another 111 over the next two years.

The retailer trades in 14 other countries on the continent, and, despite weaker economic growth due to lower commodity prices, sales in this segment expanded by 32.6 percent compared with 10.9 percent at home.

Africa’s two largest oil producers, Angola and Nigeria, were hit by foreign exchange shortages as earnings from crude sales collapsed.

But Shoprite’s Angolan business produced its sharpest growth, as the retailer was able to replenish goods while other retailers were hamstrung by foreign exchange rules.

“Access to dollars allowed us to have stock on the shelves,” said Basson, adding that the local currency was reinvested and the excess profits in Angola had paid for new store openings.

Shoprite’s total number of supermarkets outside South Africa grew to 207, with most of the 22 new stores opened in Angola, Zambia and Nigeria, Shoprite said.

The firm’s diluted headline earnings per share for the 53 weeks to end-June rose 17 percent to 899.7 cents from 769.1 cents.

Headline earnings per share is the main profit measure in South Africa which strips out certain one-off items.

Shares in Shoprite were up 1 percent to 201 rand by 1213 GMT, 5 percent below the all-time high of 211.76 rand scaled on August 10.

(Reporting by TJ Strydom; editing by Susan Thomas)