Kgomotso Mathe
10 July 2009
Johannesburg — IN THE middle of a deep recession, Shoprite was still able to perform better that most of its competitors, an analyst said yesterday.
Africa's big retailer, Shoprite, yesterday released its trading update, in which it said that for the 12 months to June the group increased its total turnover 24,5% to R59,3bn. Year-on-year growth was 19,1%.
The South African supermarket division, the core operation of the group, increased sales 22,8%.
The group said in a statement that this division had continued its policy of cutting margins on basic foodstuffs to alleviate the effect of food price increases on consumers.
"They are trading well, probably better than most food retailers in SA," said Coronation Fund Managers investment analyst Quinton Ivan.
He said that from the trading update it appeared that Shoprite had managed to grow its volumes 3% while its competitors either reported negative or flat growth.
"They are most likely gaining market share," Ivan said.
Absa analyst Christopher Gilmour said: "I do think the market was expecting that.
"Their policy of targeting the lower end of the market and taking that to the rest of Africa was a clever strategy that has worked for them," he said.
Shoprite said turnover growth had slowed in the second half of the year to 21,8% from 27,3%.
"Management ascribes the slower turnover growth to the increasing pressure on the disposable income of consumers and the lower internal food inflation, which reduced from 16,9% in the first six months to 14,7% in the second half," the statement said.
Internal food inflation increased to 15,8% compared with the 10,6% during the previous corresponding 12 months.
Meanwhile, retailer Massmart also posted a 10,4% growth in total sales to June 28. The group sales revenue reached R43,1bn.
Be the first to Write a Comment!
Copyright © 2009 Business Day. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
