Shoprite shareholders to tighten belts
The grocery chain has cut its interim dividend 24% after its rest of Africa stores fell into a loss and trading profit from its local stores fell 15%
Shoprite shareholders have had their interim dividend cut 24% as the grocery chain battles with losses from outside SA, and shrinking profit in its home market.
Shoprite reported its rest of Africa division fell into a trading loss of R62m for the 26 weeks to December 30, from a trading profit of R553m in the first half of its 2018 financial year.
This was mainly due to hyperinflation in Angola, Shoprite noted in its interim results, released on Tuesday morning.
Trading profit from its South African stores fell 15% to R2.8bn from R3.3bn.
The grocery chain declared a R1.56 interim dividend, down from R2.05 in the matching period, rolling it back to the interim dividend paid in 2016.
The group reported its overall sales remained flat at R78bn, with 2.1% growth in its home market to R58.5bn weighed down by a 13% decline to R11bn from its rest of Africa stores.
“We have dealt with many internal challenges, investment expenses and operational issues relating to the implementation of strategic decisions including the roll out of the new SAP ERP system,” CEO Pieter Engelbrecht said in the results statement.
“The IT replatforming was an absolute imperative and represents the culmination of four years of planning, and it will ultimately improve our global competitiveness.”
The group ended the reporting period with 2,738 stores, 156 more than the year before.
“The group's strategy to capture a greater proportion of the top-end, affluent consumer segments' grocery expenditure has seen Checkers, excluding the larger format Hyper stores, increase sales by 4.3%. The opening and conversion of Checkers stores to our new FreshX concept currently stands at 20 and the focus remains to transform a third of our Checkers store portfolio to this format,” Engelbrecht said.
“Notwithstanding its shopper base being the hardest hit by prevailing economic conditions, Shoprite grew sales by 1.2% with zero internal food inflation for the period.”