Disappointing annual sales numbers for Shoprite

South Africa’s biggest food retailer Shoprite Holdings saw its shares slide after reporting a 7% rise in full-year sales that fell short of analysts’ estimates.

Shoprite, which runs discount grocery stores, said on Monday total sales rose 7.3% in the year to end-June, to about R72.3-billion. A Thomson Reuters poll of seven analysts expected R74.4-billion.

“When you look at the number in isolation, it is still an astonishingly good performance in a very tight, competitive environment,” said Syd Vianello, analyst at Nedcor Securities.

“But the fact is, the market was expecting more.”

Shares in the company fell 1.8% to R102.26, underperforming a 1.3% drop in Johannesburg’s Top 40 index of blue-chips.

Consumer demand is recovering in South Africa after a contraction in 2009, helped by 6.5 percentage points of interest rate cuts that have pushed borrowing costs to historic lows.

SA optimism
However, analysts and fund mangers caution the recovery is not enough to justify the high valuations of retailers.

Shoprite trades at around 20.5 times its forward 12-month earnings — according to Thomson Reuters data — compared with some 15 times at Australia’s Woolworths.

Vianello said he has been urging clients to dump the stock over the past year.

“People have been piling into South African stocks on optimism, but the stark reality is that things are very tough in this economy,” he said.

Although latest data shows South Africa’s retail sales accelerating almost 10% in April, sales growth has been much weaker than expected this year.

Shoprite’s mainstay South African business increased sales by 7.2%, while its 114 supermarkets in the rest of the continent lifted sales by 2.1% in rand currency terms.

The group furniture unit grew turnover by 1.9% as indebted consumers continue to put off buying big-ticket items. — Reuters

Tiisetso Motsoeneng
Tiisetso Motsoeneng works from Johannesburg. Deputy Editor: Business Day in Johannesburg, home to Africa’s deepest capital market. Tiisetso Motsoeneng has over 285 followers on Twitter.

‘There were no marks on his neck’, Neil Aggett inquest...

The trade unionist’s partner at the time he was detained at John Vorster Square says she now believes his death was not a suicide

We need to ask awkward questions about our schools

Ignore the language used in brochures and on open days and be vigilant about the details

Study unpacks the ‘hidden racism’ at Stellenbosch

Students say they feel unseen and unheard at the university because of their skin colour

Ramaphosa enters the fray in fight between Gordhan and Mkhwebane

The president said his court case is “unfortunate” and a “measure of last resort”

Press Releases

Gender-based violence is an affront to our humanity

Gender-based violence is an affront to our humanity

UK-Africa investment summit 2020: Think Africa Invest SA

UK-Africa investment summit 2020: Think Africa Invest SA

MTN unveils TikTok bundles

Customised MTN TikTok data bundles are available to all prepaid customers on *136*2#.

Marketers need to reinvent themselves

Marketing is an exciting discipline, offering the perfect fit for individuals who are equally interested in business, human dynamics and strategic thinking. But the...

Upskill yourself to land your dream job in 2020

If you received admission to an IIE Higher Certificate qualification, once you have graduated, you can articulate to an IIE Diploma and then IIE Bachelor's degree at IIE Rosebank College.

South Africans unsure of what to expect in 2020

Almost half (49%) of South Africans, 15 years and older, agree or strongly agree that they view 2020 with optimism.

KZN teacher educators jet off to Columbia University

A group of academics were selected as participants of the programme focused on PhD completion, mobility, supervision capacity development and the generation of high-impact research.

New-style star accretion bursts dazzle astronomers

Associate Professor James O Chibueze and Dr SP van den Heever are part of an international team of astronomers studying the G358-MM1 high-mass protostar.