Africa’s biggest food retailer Shoprite reported an 18.6% rise in first-half profits on Tuesday. This was helped by higher prices, a favourable exchange rate and above-inflation wage increases for consumers in its main South African market.
Shoprite, which runs discount chains, said headline earnings per share (HEPS) totalled 280.8 cents in the six months to end December, compared with 236.8 cents a year earlier.
HEPS, the primary profit measure in South Africa, strips out certain one-off items.
The results support data showing that consumer spending is improving in Africa’s biggest economy due to decades-low interest rates and above-inflation wage hikes for workers in several sectors, but the outlook is uncertain due to high personal debt levels and unemployment.
Retail sales’ growth accelerates
South African retail sales jumped 8.7% year-on-year in December, from an upwardly revised 7.2% growth in November and beating a 6.5% slow down economists had expected.
Shoprite, a domestic merchant seen likely to lose the most from discounter Walmart’s entry into the country, has also benefited from store expansion at home and across the continent.
Walmart and its 51%-owned unit Massmart are also due to report their results this week.
Shoprite said sales increased 13.2% to R41-billion after increasing prices by an average of 4.6% and gaining nearly R30-million from favourable currency swings.
Shares in Shoprite, which operates in countries including Nigeria, Angola and Zambia, inched up 0.73% to R133.65 by 7.44am GMT.
The company’s stock has fallen more than 2% so far this year, lagging behind a 7% rise in the Top-40 index and reflecting views that domestic retailers are overvalued. — Reuters