Shoprite Group, Africa’s largest grocer, is considering exiting countries outside South Africa where the performance of its supermarket operations are unimpressive, according to the firm’s operational update for the quarter ending in September.
The company said it would conduct a performance review of the markets after it recorded a 4.9 percent dip in revenue in the third quarter of 2019 excluding its South African market where it has its core business.
“If we have to close a country we will, we will make the decision no matter how hard it is,” Chief Executive Officer Pieter Engelbrecht told shareholders at an annual meeting on Monday. “We are not scared to take the hard decisions.”
In the review quarter, the company said the continued currency devaluations and Xenophobic attacks on its Nigerian business after violence erupted in South Africa against immigrants from other African countries, combined to weigh on the company’s performance in countries beyond the South African borders.
As a result, the company said its management was “reviewing the return” on its capital invested in the rest of the continent, while it intensifies efforts to cut costs.
But in spite of these headwinds, Shoprite’s South African unit defied the economic downturns in the country to deliver a 10.3 percent increase in revenue in the three months leading to September this year. This compares with a 1.7 percent sales growth recorded in the same period a year earlier.
The shares of the grocer jumped some 3 percent Tuesday to 139.20 rand as of 7:00 pm Nigerian time on the Johannesburg Stock Exchange ( JSE), bringing the company’s market value to 82.31 billion rand ($5.6 billion).
The group’s other operating segments, which include the OK Franchise, Computicket, Medirite pharmacies and Checkers Food Services, reported a 6.4 percent increase in sales. The OK Franchise division grew sales by 8.6 percent.
The company said it opened 15 new stores during the quarter across its three supermarket trading brands – Usave, Shoprite and Checkers – comprising eight Usaves, four Shoprites and three Checkers stores. “Our furniture store base reduced by a net 10 stores,” it said. “Liquor shop added a net 10 stores to reach a milestone 500 stores. Our OK Franchise division grew its base by a net 10 stores in the quarter.”
The group said its Xtra Savings Rewards Programme, which marries advanced data processing with marketing automation into a powerful personalisation engine, has exceeded expectations through its launch in all
Checkers stores in South Africa, with more than a million members signing up after just one week.
“This launch aligns with the Group’s focus to ensure our customers save more every day, paving the way for smarter decisionmaking and precision retailing,” Shoprite said in a statement. “It also unlocks alternate revenue streams from existing and new customers.”
The company remained confident of an impressive outing this year. “With the momentum achieved during the first quarter, the
Group enters the important festive trading period with confidence in our operations and Group brand strategy both of which position us to deliver unsurpassed value to our 35 million customers across South Africa and the rest of Africa.”
