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24 Aug 2010 12:20
Shoprite, Africa’s biggest grocer, booked a 16% rise in full-year profit as its mainstay South African customers warm up to spending due to decades-low interest rates and tentative economic growth.
Shoprite, which caters for the lower end of the retail market, said on Tuesday headline earnings per share rose to 451,6 cents in the year to end-June, from 390,8 cents a year earlier.
Headline EPS is the main profit gauge in South Africa and strips out certain one-off items.
Investors have been snapping up retailers such Shoprite as consumer demand has been boosted by interest rates at the lowest in more than 30 years, the 2010 Soccer World Cup and a slow economic recovery.
Nonetheless, personal debt remains high and unemployment is stuck around 25%.
South Africa’s retail sales rose for a sixth consecutive month in June, helped by World Cup spending, but the increase was slightly weaker than expected.
Shoprite said sales increased 13,6% to R67,4-billion, bolstered mainly by its South African unit while sales from its African stores were hit by unfavourable currency swings.
The company, whose shares have rallied about 25% so far this year, said it did not expect market conditions to change markedly in the months ahead.
“With most of the country’s major infrastructural projects completed, job losses are expected to continue,” Shoprite said in a statement.—Reuters
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