More results...

Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors
Whitey Basson

Shoprite to expand with 104 new stores

Shoprite Holdings, the largest retailer in Africa, said this week in announcing its annual results, that it plans to continue an ambitious expansion drive – 104 new stores by June 2014, including several outside its home market – despite missing earning expectations which an unapologetic CEO Whitey Basson put down to the SA consumer “being under distress, especially the middle class consumer in the five to seven LSM…”

Basson said at a presentation of the group’s annual results on Tuesday: “We know the market was disappointed, but we think we did well. It was a tough year of trading, with new competitors.”

Earlier, the group reported a 19.6% rise in headline earnings per share to 607.04c for the year ended June 2012, from 507.6c a year earlier — well below the average estimate of 617c given in a Thomson Reuters poll of 13 analysts.

The I-Net Bridge consensus forecast had been for HEPS of 615.4 cents and a dividend of 309.8 cents.

Diluted earnings per share were up 19% at 590c from the corresponding period in 2011, and a final dividend of 194c was declared‚ up 17.6% from 165c in 2011. This brings the total dividend for the year to 303c from last year’s 253c.

Commenting on the results, Basson said: “The group’s ability to perform well despite adverse market conditions was again illustrated in the year to June 2012.

“The turnover increase of 14.3% in its supermarkets, in an environment in which internal food inflation averaged 4.9%, represents real growth in excess of 9%‚” he said in a JSE Sens statement.

The retailer’s trading profit was up 17.02% to R4.665bn.

“The business environment remained largely unchanged from the previous reporting period.

“South African consumers‚ beset on all sides by the challenges of rising debt and increased living expenses‚ continue to face persistent high levels of unemployment‚ rising electricity‚ schooling and transport costs‚ and the impact of a weaker rand, which affected the prices of all imports‚” the Sens statement read.

“However‚ the government played its part in assisting consumers and the economy by keeping interest levels at their lowest in 30 years, while continuing the payment of social grants, from child maintenance to old age pensions‚ to an increasing number of low-income recipients‚” he said.

Basson noted that the company had maintained its aggressive expansion, with 170 corporate outlets and a presence in 17 countries after opening in Kinshasa in the Democratic Republic of Congo this year. However, he said, the group was “not doing as wonderfully as we thought in Kinshasa”.

Looking ahead, the Shoprite boss foresaw food inflation rising due to the maize shortage and the drought in the US.

He also flagged electricity costs as a concern that would drive South African price inflation. On a positive note, social grant spending was set to increase, which would benefit Shoprite. New car sales were also up in July, and pointing to increasing consumer confidence.

Basson said the group would continue its expansion strategy, with 104 supermarkets planned to June 2014, and more supermarket activity outside South Africa in the medium term.

He said 21 opportunities had been confirmed in Angola and nine in Nigeria, and the group had the capital to fund these opportunities — thanks to the rights offer — which would enhance the speed of developments.

Basson added that R8bn would be used for a new property fund in Nigeria to secure centres for Shoprite.

Shoprite, which currently operates 153 supermarkets in 16 countries outside of South Africa, made the statement in a document handed out at its full-year earnings news conference.

The retailer said it missed forecasts with an 11% rise in full-year profit as debt-laden consumers at its core South African market cut down on spending.

The Cape Town-based grocer reported that headline earnings per share (EPS) totalled 675.4 cents in the year to end-June, compared with 607c a year earlier.

Eleven analysts polled by Reuters were expecting the company to deliver headline EPS of 681c. Headline EPS, South Africa’s primary profit gauge, excludes certain one-time items. Sales rose 12% to R92.7bn.

Shares in Shoprite, which have slumped more than 20% this year, fell 1.2% to R159.66, lagging behind a 0.9% decline in the JSE Top-40 index.

Sources: Reuters, BDLive

Talking to Whitey Basson – CEO, Shoprite Holdings

Moneyweb: Well, Shoprite Holdings results for the full year to June 2013 show a 12.1% increase in revenue to nearly R93bn, with trading profit up 15.6% to R5.4bn, headline earnings per share rose 11.3% and its margin expanded to 5.8%.

The slower growth in the South African economy saw supermarket sales here grow 9.8%, elsewhere on the continent supermarket sales in the 16 countries outside of South Africa grew almost 28%. Whitey Basson is chief executive of Shoprite Holdings. Whitey, how would you characterise the South African consumer at the moment?

Whitey Basson: I think under distress, especially the middle class consumer in the five to seven LSM, which has been very badly hit by petrol price increases, electricity increases and those items which actually form a large portion of their monthly income.

If you think of that in real terms then the average cost of a person getting to a supermarket now would equate – if he uses a public transport – would equate to approximately 20% to 25% of the average basket size of a Shoprite customer and that makes a difference in the buying behaviour of people because it’s a lot of money that now has to go for taxis and trains and what have you that used to go into food baskets…..

Moneyweb.co.za: Read the full interview

No Comments

Sorry, the comment form is closed at this time.