Shoprite Holdings has reported stellar sales growth for the 52 weeks ending on July 2, 2023. During this period, the Group recorded a remarkable 16.9% increase in the total sale of merchandise, reaching approximately R215.0 billion. This outstanding performance reflects the Group’s ability to adapt to challenging market conditions and capitalize on growth opportunities.
Segment-wise Sales Performance
The Group’s sales growth was distributed across its diverse segments, each contributing significantly to the overall success:
1. Supermarkets RSA: Shoprite’s core business, Supermarkets RSA, emerged as a star performer, achieving a robust sales growth of 17.8%, with like-for-like sales increasing by an impressive 10.3%. This segment played a pivotal role in the Group’s overall sales, contributing a substantial 80.8%. Key brands within this segment, Checkers, and Checkers Hyper, delivered exceptional sales growth of 18.0%, while Shoprite and Usave also showed strong performance with a sales growth of 15.6%. Notably, LiquorShop saw an exponential increase in sales by 30.8%. The first half of the year experienced even higher sales growth of 35.6%, largely due to the impact of Covid-19 lockdown closures in the previous year. In the second half, sales remained robust, increasing by 25.9%. During the year, Supermarkets RSA added a net of 301 stores, bringing the total number of stores to 2,121. This figure includes 94 stores acquired from Massmart Holdings Ltd, with 92 stores integrated into Shoprite, Usave, and LiquorShop businesses during the second half.
2. Supermarkets Non-RSA: The Supermarkets Non-RSA segment, operating in various international markets, reported a commendable sales growth of 16.4% in reporting currency (Rand), contributing 9.1% to the Group’s overall sales. During the period, this segment expanded its store base by a net of two stores, reaching a total of 228 stores operating across nine countries.
3. Furniture: Shoprite’s Furniture segment, contributing 3.3% to Group sales, reported a solid sales increase of 5.1%, with like-for-like sales growing by 2.0%. The segment’s store base expanded by a net of eight stores, ending the year with a total of 434 stores.
4. Other Operating Segments: The Group’s Other operating segments delivered robust sales growth of 13.3% during the period, contributing 6.8% to Group sales. Notably, sales to the Group’s OK Franchise business increased by 13.7%. Furthermore, the OK Franchise division added a net of 22 stores, ending the year with 535 stores. The Group also opened four Medirite Plus standalone stores, increasing the total standalone stores to six, with 134 Medirite pharmacies located within supermarkets.
Challenges Faced During the Period
Despite the impressive sales growth, Shoprite Holdings encountered several challenges that impacted its financials during the period:
1. Commitment to Lower Prices: Throughout the year, Shoprite Holdings remained steadfast in its commitment to providing lower prices and better value to customers. As a result, the Group’s full-year gross margin is expected to be lower compared to the previous year.
2. Load-shedding Expenses: The cost of diesel to power generators during load-shedding across Supermarkets RSA store base amounted to R1.3 billion. The higher stages of load-shedding occurring from September 2022 led to a significant increase in costs.
3. Employee Distributions and Onboarding: The Group incurred expenses related to distributions paid to Shoprite Group employees from the Shoprite Employee Trust and the onboarding of 4,480 employees as part of the stores acquired from Massmart.
Pro Forma Financial Information and Year-End Results
Shoprite Holdings clarified that the like-for-like sales growth constitutes pro forma financial information and is prepared for illustrative purposes only. The Group’s year-end results for the period ended July 2, 2023, will be released on the JSE Stock Exchange News Service (SENS) by 8:00 am on Tuesday, September 5, 2023. The year-end results presentation will take place at 9:30 am on the same day, and the Group’s CEO, Pieter Engelbrecht, invites all interested parties to attend the webcast presentation by registering on the Group’s website or through the provided link.
Conclusion
Shoprite Holdings’ exceptional sales growth of 16.9% in the 52 weeks to July 2, 2023, underscores its resilience and ability to navigate through challenging market conditions. With strong performances across all segments, the Group has reaffirmed its position as a leader in the retail industry. As Shoprite continues to focus on customer growth and market share gains, stakeholders eagerly await the release of the year-end results to gain deeper insights into the Group’s financial performance and strategic outlook.
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