Ambitious capex and tough trading environment weigh on Shoprite’s turnover
CEO Pieter Engelbrecht says retailer might not have spent so much had it known of impending obstacles
Africa’s largest food retailer, Shoprite, reported a nominal turnover increase for the three months to end-September as currency devaluations, low food inflation and strikes heightened the challenges of rolling out its multibillion-rand new warehousing system. This has put the group on course for one of its weakest set of interim results in several years. In the past six years Shoprite has spent R40bn on capital expenditure (capex), R7bn more than the market cap of its nearest rival, Pick n Pay, which invested just R1bn in its last financial year. In 2017 Shoprite committed R7bn to capex, mostly directed to centralised warehouse facilities and information systems.
Addressing the media after the group’s annual general meeting on Monday, CEO Pieter Engelbrecht said if the board had known how tough the trading environment was going to be he was not sure they would have gone ahead with the ambitious capex programme. “We had to deal with three strikes in one year, deflation, new di...