Shoprite 2023: Profit Surge and Dividend Delight

  • Strong Financial Performance: Shoprite Holdings reports a 9.4% increase in profit, strong sales growth, and higher dividends in 2023.
  • Dividend Boost: Shareholders delighted as the company raises its dividend by 10.5%, reflecting a commitment to rewarding investors.
  • Resilience Amid Challenges: Despite power disruptions and economic uncertainty, Shoprite's customer focus and adaptability drive impressive growth.

Shoprite Holdings Ltd, one of South Africa’s leading retail giants, has reported robust financial results for the 52 weeks ended July 2, 2023. The company’s performance in a challenging economic environment demonstrates resilience, innovation, and a commitment to delivering value to shareholders and customers.

A Year of Impressive Financial Growth

In a year marked by economic uncertainty and disruptions, Shoprite Holdings Ltd has achieved remarkable financial growth across various key metrics. Here’s a closer look at the numbers:

Metric20232022Change
Sale of merchandise (Rm)R214,956R183,868+16.9%
Trading profit (Rm)R11,916R11,278+5.7%
Operating profit (Rm)R12,344R11,055+11.7%
Profit before income tax (Rm)R9,132R8,332+9.6%
Income tax expense (Rm)R2,812R2,553+10.1%
Profit for the year (Rm)R6,320R5,779+9.4%
Headline earnings per share (cents)1,166.21,063.9+9.6%
Basic earnings per share (cents)1,161.41,055.5+10.0%
Dividend per share (cents)663.0600.0+10.5%

Note: All values are in South African Rands (Rm) unless otherwise stated.

The Group’s sale of merchandise reached an impressive R214.956 billion in 2023, a significant increase of 16.9% from the previous year’s R183.868 billion. This robust sales performance reflects Shoprite’s ability to cater to diverse customer needs, even in challenging market conditions.

Strong Earnings Growth

Earnings per share also saw notable improvements in 2023. Headline earnings per share rose to 1,166.2 cents, marking a 9.6% increase from 2022. Basic earnings per share, on the other hand, saw a 10% increase, reaching 1,161.4 cents. These figures reflect the Group’s focus on profitability and delivering value to its shareholders.

Dividend Increase Delights Shareholders

In a move welcomed by investors, the Board of Directors declared a final dividend of 415 cents per ordinary share for 2023. This represents an increase from the 367 cents per share paid in 2022. The total dividend for the year now stands at 663 cents per ordinary share, up from 600 cents in 2022. The increased dividend payout underscores the company’s commitment to providing returns to its shareholders.

The last day to trade cum dividend will be Tuesday, September 26, 2023. Starting from Wednesday, September 27, 2023, all trading of Shoprite Holdings Ltd shares will take place ex dividend. The record date for the dividend is Friday, September 29, 2023. Please note that share certificates may not be dematerialized or rematerialized between September 27 and September 29, 2023, both days inclusive.

The Dividends Tax rate in South Africa is 20%, with a net local dividend amount of 415 cents per share for shareholders exempt from paying Dividends Tax and 332 cents per share for shareholders liable to pay Dividends Tax.

CEO Highlights Achievements and Challenges

Pieter Engelbrecht, the Chief Executive Officer of Shoprite Holdings Ltd, expressed his thoughts on the Group’s performance in 2023. He emphasized that despite facing unprecedented challenges, the company had achieved record levels of market share, saved customers over R13.5 billion in Xtra Savings, and increased profits and dividends.

Engelbrecht highlighted several key achievements and challenges:

Sales Growth and Customer Focus

  • The Group achieved an impressive 17.8% sales growth in its core Supermarkets RSA business, driven by a multi-year transformation strategy.
  • Checkers and Checkers Hyper recorded an 18.0% increase in sales, thanks to a focus on value and a wide range of products.
  • The omnichannel approach, exemplified by Checkers Sixty60, saw an impressive 81.5% increase in sales.

Commitment to Affordability

  • Shoprite and Usave’s commitment to low prices and affordability delivered a 15.6% sales growth.
  • The successful integration of 92 Massmart stores into operations contributed to the second-half sales growth.

Record Market Share Gains

  • In a challenging environment, customers continued to support Shoprite, leading to an additional R26.0 billion in spending compared to the previous year.
  • The Group extended its period of uninterrupted South African market share gains to 52 months.

Power Challenges

  • Engelbrecht acknowledged the impact of load-shedding, which resulted in a significant expense of R1.3 billion to power generators across South African stores.
  • Despite these challenges, the Group reported growth in headline earnings and dividends per share.

Store Growth and Job Creation

  • In a record year for store growth, Shoprite added 340 net new stores, reaching a total of 3,326 stores.
  • The Group created 3,651 new jobs, excluding the employees from the Massmart acquisition.
  • The Shoprite Employee Trust, in its second year, expensed R235 million in employee distributions in South Africa and equivalent awards to qualifying employees in other countries.

Engelbrecht expressed his pride in the commendable achievements of the Group and extended his gratitude to customers and the nearly 154,000 employees who contribute to Team Shoprite’s success. He emphasized that it is their leadership and collective commitment that made this performance possible, benefiting both shareholders and the wider community.

A Year of Resilience and Growth

Shoprite Holdings Ltd’s financial results for 2023 tell a story of resilience and growth. Despite facing challenges like load-shedding and economic uncertainties, the company has delivered strong sales growth, increased earnings, and higher dividends for its shareholders. The commitment to affordability, customer-focused strategies, and a dedicated workforce have been key drivers behind this success.

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