Shoprite Sees Strong Trade Amid Slack South African Spending

Shoprite Holdings Ltd., South Africa’s largest retailer, said sales growth accelerated in the three months through September, as it curbed food-price increases to gain financially constrained shoppers.

Sales rose 10 percent in the period, stronger than in the three months to June, Shoprite said in a statement today. Revenue rose 16 percent in the first quarter last year.

Business has been strong so far this month, Chairman Christo Wiese told the company’s annual general meeting. Shoprite’s food prices were on average about 4.2 percent higher in the three-month period, below official food-price inflation of 6.6 percent, the company said.

“Shoprite has been able to achieve pretty good growth, especially in this economy,” David Shapiro, a director at Sasfin Securities in Johannesburg, said by phone. “They have been able to draw customers as people feel there is value.”

South African consumer confidence reached a 10-year low in the three months through September as inflationary pressures curbed spending and demand for credit.

First-quarter revenue at Shoprite’s main domestic operations increased 8.3 percent, compared with growth of 12 percent in the same period a year earlier. The company plans to open 46 supermarkets before the end of December.

Pick n Pay

Pick n Pay Stores Ltd., Shoprite’s biggest food rival, has “certainly done a good job in terms of discipline,” Chief Executive Officer Whitey Basson said at the meeting. Pick n Pay last week said first-half profit climbed as it reduced costs, added new stores and slowed its market share decline. Shoprite is not yet feeling much impact from Wal-Mart Stores Inc.’s presence in South Africa, Basson said.

In the retailer’s non-domestic African unit, sales gained 16 percent, compared with 26 percent in the previous year, Shoprite said, without quantifying revenue.

Wiese said the Pepkor Group, South Africa’s biggest clothing company of which he is also chairman, is considering acquisitions in the U.K. BHS, the department-store chain owned by billionaire Philip Green, “may well be one that we end up looking at,” he said at the AGM.

The Mail on Sunday reported yesterday that Wiese has formed a partnership with former Asda Group Ltd. CEO Andy Bond, who has been asked to find possible U.K. targets.

“These things can develop very quickly, but there is nothing hard on the table,” Wiese said. “Andy Bond has been on our payroll, but for a long time in an advisory capacity.”

Shoprite shares gained 0.4 percent to 181.50 rand at the close of trading in Johannesburg, the highest since July 16.

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