Shoprite looks beyond Africa
Picture: Bloomberg Picture: Bloomberg
Johannesburg - Shoprite Holdings will focus on expansion
outside Africa after talks with Steinhoff International Holdings to create the
continent’s biggest retailer fell apart.
“To sustain our growth, we are constantly investigating
the potential of new markets, not only in Africa but also on other continents,”
newly appointed CEO Pieter Engelbrecht said in a statement on Tuesday. The Cape
Town-based company has 2 653 stores across Africa, and said profit rose 11
percent to R2.44 billion ($187 million) in the six months through December.
The shares rose as much as 5 percent in Johannesburg
after soaring 8.6 percent on Monday when the plan to merge with Steinhoff was
abandoned. That’s the biggest two-day gain on an intraday basis for more than
decade. Shoprite is up 14 percent this year, valuing Africa’s biggest
supermarket operator at R112 billion.
The company boosted profit as poorer South Africans
struggling with high unemployment and inflation shopped at its cheaper
Usave stores, the best performer among the retailer’s three supermarket brands.
Shoprite also stepped up marketing activity, discounts and cost controls, while
lessening the impact of a widespread drought on food inflation by subsidising
basic foods, the company said.
“We have structured the business to contend efficiently
and profitably under market conditions such as those prevailing currently,”
Engelbrecht said. “The second half of the year has started well for us and we
are confident this trend will continue.”
Read also: Shoprite, Steinhoff 'no deal' lifts JSE
Sales advanced 14 percent in the six month period,
including 32 percent in the rest of Africa. The half-year dividend was raised
by 15 percent to R1.80 a share.
South African supermarkets generate almost 80 percent of
Shoprite’s total supermarket sales, demonstrating the need to expand
internationally. The company also appealed to wealthier consumers through the
expansion of its fresh and convenience food offering, which rose four-fold over
the Christmas period.
Shoprite and Steinhoff abandoned talks after their
biggest shareholders, including billionaire Christo Wiese, were unable to reach
agreement on the share-exchange ratio that would have been applied to the deal.
Shoprite shares rose 3.3 percent to R194.17 as of 10:04
a.m. in Johannesburg.