Shoprite: results good, but be careful
Though Shoprite has done well on many fronts, investors would do well to tread cautiously
It’s little wonder that Shoprite is still stealing a march on its competitors: the grocery chain parlayed almost nonexistent price hikes into a 6.3% gain in sales for the six months to December of R75.8bn. By contrast, Woolworths relied on a 4.4% increase in food prices to help lift its half-year sales, while Spar reported internal inflation of 2.2% in its SA operations for the 17 weeks to January 27. This helped Shoprite, still chaired by Christo Wiese, defy the harshest trading conditions for a grocery chain in almost a decade. Boosted by a swing from a R188m foreign-exchange loss to a R4m gain, Shoprite’s headline EPS (HEPS) jumped 14.2%. Excluding the foreign-exchange swing, HEPS were up 8%. "It was a very good result," says Alec Abraham of Sasfin Securities. "It was well ahead of anything I had been expecting." What made Shoprite’s performance all the more impressive was an ultra-low internal inflation rate of just 0.4% in its core SA supermarkets division. This was seven perce...
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