Investors shave R15bn off Shoprite after dire report
Shares slump to biggest one-day drop since 1999
Investors shaved R15bn off the value of Shoprite on Wednesday after Africa’s biggest retailer by market capitalisation issued a dire trading warning the previous day. The shares slumped as much as 16.6% and closed 14% weaker at R153.13, valuing the company at R90.5bn. It was its biggest one-day drop since 1999, after it said its troubles in the rest of Africa would combine with food-price deflation in its own market to push headline earnings per share down as much as 36%. Wednesday’s decline pushed the stock’s drop over the past year to 36%, compared with an 11% decline on the FTSE/JSE Africa Food & Drug Retailers index. The all share index dropped 9.1% in the same period. Like peers such as Woolworths, which largely caters for wealthier customers, Shoprite has been knocked by a weak economy that slipped into a recession in 2018. Consumers saw their buying power being squeezed by a combination of higher taxes and fuel prices that rose to record highs.
"Profitability has been a...