Shoprite Quarterly Growth Slows on Weaker South African SJanice Kew
Shoprite Holdings Ltd., South Africa’s largest food retailer, gained the most in more than six years after sales growth accelerated in the first quarter and trading conditions began to stabilize as Christmas approaches.
Revenue rose 12.3 percent in the three months through September, compared with an increase of 10 percent in the first quarter the previous year, the Cape Town-based company said in a statement today. Sales at South African supermarkets gained 11.9 percent even as consumer spending in the retailer’s domestic market came under pressure.
“We are well prepared and expect fair trading conditions in the run-up to Christmas,” Chairman Christo Wiese said in an interview. The resolution of lengthy strikes by platinum mining and manufacturing workers earlier in the year has improved the economic backdrop, he said.
Shoprite shares advanced 7.1 percent to 151 rand at the close in Johannesburg, the biggest gain since September 2008. That pared the decline for the year to 7.9 percent.
Consumer spending in Africa’s second-biggest economy has been constrained by rising inflation, strikes and unemployment of more than 25 percent. Shoprite has been expanding in the rest of the continent, where sales advanced 16 percent in the three month period, the company said. South African market share has grown to 34.2 percent from about 33.5 percent a year earlier, Wiese said.
“The trading update is a lot better than I expected on the local front, which is Shoprite’s core market,” Alec Abraham, a retail analyst at Sasfin, said by phone. “Shoprite will keep prices low to keep customers coming into the stores. It is a slightly better market generally -- less strikes.”
Shoprite will open 27 new supermarkets before the end of 2014, after 80 started operating in the past 12 months.