Shoprite says it managed to grow sales over the six months to end-December even as food price inflation slowed and shoppers remained under pressure.
On Monday, the country’s largest food retailer reported sales from continuing operations of R136.8bn, up 7.2% from the same period last year. That means the group made about R752m in sales every day over the six months.
Most of the growth came from Supermarkets RSA, Shoprite’s core business, which makes up more than 84% of group sales. This segment increased sales by 7.1%, adding R7.7bn over the period.
Shoprite said it grew sales while keeping prices almost flat. Official food inflation averaged 4.7% for the six months, but Shoprite’s own selling price inflation was just 0.7%. During the key November and December trading period, prices across parts of the group actually fell.
Because of this, like-for-like sales increased only 1.9%, showing that growth came mainly from selling more items and opening more stores, rather than charging higher prices. Even so, Shoprite still grew more than twice as fast as the rest of the market, according to data from market researcher NielsenIQ.
Shoprite and Usave grew more slowly and experienced price deflation, while Checkers and Checkers Hyper grew faster, helped by slightly higher prices, the group said. Online grocery delivery platform Sixty60 increased sales by 34.6%, while newer formats such as Petshop Science and Uniq Clothing by Checkers also posted strong growth from a small base.
By keeping price increases well below national food inflation, Shoprite absorbed costs instead of passing them on to shoppers. Based on the difference between food inflation and Shoprite’s price increases, the group saved customers about R4.6bn over the six months, roughly R25m every day.
Even with low inflation and pressure on consumers, Shoprite expects earnings to improve. HEPS from continuing operations are forecast to rise by 5.2% to 10.2%, driven by higher volumes, market share gains and store expansion rather than price increases.
The group will release its full interim results in March.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.