• Friday, June 14, 2024
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BusinessDay

African sales growth increased 29%

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Shoprite rose the most in almost eight years after Africa’s biggest food retailer said growth in full-year sales accelerated, led by gains at stores outside its home market of South Africa.

Shoprite surged as much as 9.3 percent to R191.47 on Wednesday, the highest since January 2013 on a closing basis and the biggest gain since September 2008. The stock was 7.1 percent higher at R187.49 by 10:38am, with 1.7-million shares traded, almost 100 percent of the three-month daily average.

Turnover for the 12 months, or 53 weeks, through June increased 14.4 percent to about R130 billion, the Cape Town-based company said in a statement late Tuesday.

Gains elsewhere on the continent were achieved “despite the impact of lower commodity prices and the devaluation of certain currencies” relative to the rand, Shoprite said.

South African supermarkets, which reported a sales increase of 10.9 percent, also managed an improved trading performance in the second half of the year, the company said.

Shoprite and Pick n Pay Stores are among South African retailers succeeding in growing sales, despite headwinds including weak domestic consumer confidence, rising interest rates and a slump in the rand, which has declined 13 percent against the dollar over the past 12 months.

The International Monetary Fund forecasts economic growth for South Africa this year of 0.1 percent, which would be the slowest pace since a 2009 recession.

“Over the past few days we’ve also seen Woolworths, Truworths and Massmart release similar updates,” said Casparus Treurnicht, portfolio manager at Gryphon Asset Management.

“I will only look at like-for-like numbers here as all topline revenue numbers were very satisfactory, but I am questioning the sustainability with our local economic growth heading for a perfect zero, and ongoing store roll-outs becoming less viable.”