WOOLIES:  5,394   0 (0.00%)  20/08/2019 00:00

S.African strike and Angola stifle Shoprite sales, shares fall

By Nqobile Dludla

JOHANNESBURG, Jan 22 (Reuters) - Supermarket operator and furniture retailer Shoprite reported flat half-year sales on Tuesday, held back by a strike at its largest distribution centre in South Africa and sharp currency devaluations elsewhere in Africa.

Shares in Shoprite, which owns more than 2,800 outlets across Africa, fell more than 5 percent before paring loses to trade down 2.84 percent at 180.72 rand at 0910 GMT.

Shoprite said turnover for the six months to Dec. 31 rose just 0.03 percent to 72.9 billion rand ($5.24 billion).

Including the impact of an Angolan hyperinflation accounting adjustment, group turnover slipped 0.01 percent.

Domestic peers department store operator Woolworths and budget clothes retailer Mr Price Group last week also reported slower sales growth.

Higher value-added tax, unemployment, inflation and fuel prices have reduced spending power in South Africa.

"This was evidenced in Christmas sales in categories like Back to School essentials which outperformed traditional discretionary purchases such as toys for the first time," Shoprite said.

Adding to the sales pressure, it said product availability challenges stemming from its group's largest distribution centre in Gauteng province, which accounts for 53 percent of total centralised food distribution for the South African supermarkets businesses, affected sales in the period.

"Industrial action followed by the deployment of our new warehousing system shortly after the labour disruption hampered the ability to adequately meet demand which resulted in lost sales opportunities, which the group was unable to recover," it said.

In the rest of Africa, it attributed the lower turnover mainly to a reset of the sales performance of the Angolan business, declining 44.95 percent in rand terms "after a significant 85.13 percent devaluation of the Angolan kwanza to the U.S. dollar since January 2018".

According to the group's 2018 integrated report, Angola is the third largest operation in the rest of Africa based on the number of stores.

Shoprite's core business supermarkets RSA reported sales growth of 2.58 percent, while the non-RSA supermarkets division reported a 13.27 percent decline in sales and furniture increased sales by 4.30 percent. ($1 = 13.9058 rand) (Reporting by Nqobile Dludla; editing by Emelia Sithole-Matarise)

2019-01-22 13:00:24

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