Shoprite Holdings yesterday reported strong sales growth as it upped its dividend, but was hamstrung by a diesel bill of R560 million, which cut its profit.
In its results for the 26 weeks ended January 1, 2023, the largest grocer, reported an increase in sales by 17.5% as a result of its customers spending R12.7 billion more compared to the same period last year.
"Pleasingly, this growth was achieved across the board, with key brands Shoprite and Usave increasing sales by 15.1% and Checkers and Checkers Hyper increasing sales by 16.9%.
"In both instances this is growth ahead of the market, adding 1.4% to our South African market share as the business grew volumes, customers, and basket spend," it said.
Shoprite Group CEO Pieter Engelbrecht said: "We are disappointed that due to the considerable spend on diesel to operate generators across our stores during load-shedding, we are not reporting the level of profit and dividend growth that would normally be associated with this level of sales growth."
Shoprite said the cost of diesel to power its generators, however, was expected to remain significant and as a result, was expected to materially increase its operating expenses for the remainder of the year.
Engelbrecht said despite this, Shoprite had invested R7bn into the price for customers, increasing its interim dividend to shareholders by 6.4% to 248c a share.
Trading profit increased by 8.6% resulting in a trading margin of 5.7%. This was notably impacted by the R560m spent on diesel to operate generators over the period, representing an increase of R465m versus the comparative period.
Shoprite's diluted headline earnings per share (Dheps) rose by 10% to 577.5 cents.
The group’s core business, Supermarkets RSA, making up 80.1% of sales is represented by 1 952 stores across its major trading brands Shoprite, Usave, Checkers, Checkers Hyper, LiquorShop, and others. As a segment, Supermarkets RSA achieved 17.5% sales growth, and like-for-like sales increased by 11.1%.
Sales in the group’s Furniture segment, representing 3.7% of sales, increased by 8.6%. Like-for-like sales increased by 5.0%. Credit sales participation increased to 13.5% compared to the first half of 2022 at 12.8%.
The group’s other operating segments include OK Franchise, Transpharm, Medirite Pharmacies, Checkers Food Services, and Computicket. Sales generated by this segment increased by 12.5% for the period and represents 6.8% of sales.
"Sales to our OK Franchise business increased by 13.8%, and the OK Franchise ended the period with 535 stores," it said.
Looking ahead, the group said the operating context was likely to remain challenging on several fronts for at least the remainder of its 2023 financial year.
The Passive Income Guy (@hazelwood_dave) tweeted, “Shoprite HEPS & dividend only up 6%. Loadshedding is not the only reason. Share is far too expensive.”
Shoprite shares by 4.45pm were flat, trading down at 0.8% at R223.20 yesterday.
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