Shoprite Misses Earnings Estimates

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South African supermarket chain, Shoprite Holdings missed full-year forecasts as it was hurt by inventory shortages at home and currency devaluations in the rest of Africa. According to Reuters, Shoprite is recovering from a poor first half when sales and profit were hit by a strike at its largest distribution centre at home and installation of a new enterprise IT system which disrupted supply chains.

In the rest of Africa, currency devaluations and forex shortages in markets such as Angola, its biggest operation outside South Africa, have made it difficult to operate profitably elsewhere on the continent, touted as the next growth spot for retailers.

Trading profit fell by 14.3 per cent to 6.9 billion rand, while basic headline earnings per share (HEPS) for the year ended June 30 declined by 19.6 per cent, to 780.8 cents, compared with a restated figure of 971.4 cents a year earlier. That was worse than the 15.5% fall forecast by analysts, IBES data from Refinitiv showed.

Chief Executive Officer Pieter Engelbrecht, said in a statement in-stock levels at the Supermarkets South Africa business, which generates 74.9 per cent ofg group sales, are now higher than before it implemented the new system. Sales there grew by 4.9 per cent, with like-for-like sales growth of 1.9 per cent.
“Notwithstanding the much improved recent performance in our core Supermarkets South Africa division, it was a testing year,” Engelbrecht said.