Africa’s largest food retailer, Shoprite’s sales growth in its South African stores did little to prevent a drop in its full-year earnings after tough economic headwinds, industrial action and complications related to a new IT system blighted the first half.
The group’s turnover growth for the 12 months ending 30 June 2019 increased slightly 3.6percent to R150.4bn, driven mainly by supermarkets in its South Africa operations through 1580 stores and representing 74.9percent of group sales achieved 4.9percent sales growth for the period to report sales of R112.7bn.
However, ongoing forex shortages, currency devaluations and the aftermath of rampant inflation in Nigeria and Angola and its ongoing impact on affordability took a further toll on its revenue in other markets outside South Africa, where it reported a trading loss of R265 million for the year, with “no foreseen respite in short-term trading conditions in the region”.
“During the financial year, currencies of other large countries in which we trade, namely Nigeria and other markets, showed sharp declines against the US dollar of 29.4percent and 17.9percent respectively, this too hurt turnover growth, across the 14 countries outside South Africa in which we operate, we estimate that internal food inflation averaged 3.3% for the current year,” the company said.
Recent economic contraction left most consumers with a shrinking wallet while consumers have also moved to cheaper brands forcing them to abandon the idea of shopping in big retail outlets.
Nigeria, with a GDP size of $492 million, and population of 200 million, has seen her citizens getting poorer as more than half of the population live on less than $1.98 a day; little wonder the country has surpassed India as the world’s poverty capital.
Unemployment rate is at an all-time high of 23 percent, and to further worsen the already anemic situation of consumers is the incessant fuel hike and devaluation of the currency. The retailer, with more than 2,900 stores, is however not relenting in its expansion plans as it plans to open 29 stores in various countries in 2020 and its domestic performance is keeping sales growth on an upward trajectory.
