Shoprite Plans 14 New Stores In Nigeria

Shoprite Holdings Limited plans 14 new stores in Nigeria within the next 20 months as well as build a distribution centre in the country, chief executive, Whitey Basson said on Tuesday in Johannesburg.

Going forward, he said the company intends to move goods faster as imports into Nigeria can be delayed in ports for up to three months or so, Basson stated.

Basson, who spoke at a presentation of the company’s results, informed that Shoprite will open nearly twice as many stores on the rest of the continent this year as in 2014.

The supermarket operator is banking on rapid growth in markets such as Nigeria and Angola where it aims to change the shopping habits of Africa’s rising middle class.

“It usually takes three to five years for countries to change from pavement shopping to using supermarkets,” Basson said.

Shoprite’s sales outside of South Africa were “negatively affected by the drop in oil prices in Angola and Nigeria and their currencies depreciating against the U.S. dollar,” the retailer also said on Tuesday.

With 189 supermarkets beyond the borders of South Africa, sales in rand terms outside its home market climbed 14 percent.

The company had an exchange-rate loss of 132 million rand compared with a loss of 9 million rand a year earlier, mainly due to the devaluation of the Angolan, Nigerian and Mozambican currencies against the dollar, it also said.

However, Shoprite assured that it intends to continue “its strong expansion drive in Africa with 35 new stores planned” for African countries outside its home market by June 2016.

Shoprite said it had managed to increase sales by 11.2 percent to 113.7 billion rand ($8.80 billion) thanks to 170 new stores and taking market share in food sales from its competitors.

Nonetheless, Shoprite’s full-year profit rose by 11 percent as South Africa’s largest food retailer increased its market share for a ninth straight year.

Headline earnings, which exclude one-time items, increased to 7.73 rand a share in the 12 months through June 30 from 6.98 rand a year earlier, the Cape Town-based company said. The average of 16 analyst estimates was for 7.75 rand. The board declared a final dividend of 2.43 rand a share, raising the year’s total payout 10 percent to 3.86 rand.

“It’s locally helped by an improved performance from the Shoprite brand,” said Kyle Rollinson, an analyst at Avior Capital Markets in Johannesburg. Sales through the Shoprite brand account for a little more than half of the company’s total supermarket revenue in South Africa. Other brands include Checkers, OK Furniture, House & Home and MediRite.

South African shopping chains have struggled in the past year as unemployment of about 25 percent, prolonged strikes and high levels of personal debt contributed to sluggish growth in household incomes.

Sales at the Shoprite brand, which caters to the lower- to middle-income groups, rose 8.5 percent.

The shares climbed as much as 3.1 percent to 162.99 rand and traded at 162.69 rand as of 12:14 p.m. in Johannesburg.

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