South Africa’s leading retailer Shoprite posted amazing results for the 52 weeks ended July 2023, especially when considering the local the economic backdrop.
Shoprite’s RSA Supermarkets business grew 17.8%, taking market share (140 basis points). Checkers Sixty60 experienced an 81.5% sales increase, which is just incredible. And Sixty60 have launched a subscription model for R99 a month as opposed to R35 a trip, which should prove to be popular, will help them gain even more market share, and scale this side of the business quickly. Usave also added to sales growth following its acquisition by Shoprite and the integration of the 92 Massmart stores. These low LSM brands, Shoprite & Usave, grew sales 15.6%. The LiquorShop business increased sales by 30.8% for the period, with first quarter growth positively impacted by Covid-19-related store closure base effects.
Non-RSA supermarkets were up 16.4% in ZAR (9.6% in constant currency).
Adjusted headline earnings per share (adjusted HEPS) increased by 3.8% to 1,161.2 cents (restated 2022: 1,118.6 cents). The dividend was increased 10.5% to 415c, this brings the total dividend for the year to 663 cents (2022: 600 cents). The last day to trade will be Tuesday, 26 September 2023.
The detractors in the results were the forex impacts in H2, as well as diesel costs from loadshedding amounting to a staggering R1.3bn. The company is working on sustainable solutions to the energy crisis which should bode well for the future. Insurance costs also rose to R185m as a result of rising risk premiums from 2021’s social unrest. The standout figure has to be Shoprite’s Capex for FY24 which is anticipated to be around R8.5bn. To put this in perspective, it is around 47% and 42% of Pick n pay and Spar’s entire market caps, respectively! This phenomenal business trades on a 19x PE and is one to own in portfolios for the long term.
By Lee Kern