Shoprite,
Africa’s biggest grocer, is ramping up its expansion across the
continent with 44 new outlets in Nigeria and 21 in Angola in the next
three to four years as its core South African consumer base grapples
with high personal debt levels and growing fuel and transport costs.
The Chief Executive, Shoprite, Mr. Whitey Basson, was quoted in a Bloomberg
report on Tuesday to have said the company saw scope for the new
outlets in oil-rich Nigeria and Angola in the next three to four years.
The report stated that nearly half of
South Africans failed to pay back their debts for three straight months
this year, prompting banks to tighten their lending criteria, while a
weaker rand currency fuelled inflation and higher petrol prices.
“It’s tough out there,” Shoprite deputy
managing director, Carel Goosen, said at the presentation of the
company’s full-year results.
Cape Town-based Shoprite, which reported
an 11 per cent rise in full-year profit that fell slightly short of
market expectations, said it could double its stores outside of South
Africa in the next four years.
Shoprite has 153 supermarkets in 16
countries outside South Africa. Those foreign outlets registered a 28
per cent jump in sales in the 12 months to the end of June, nearly three
times the rate of growth in its home market during the same period.
After more than two years as an investor
favourite, South African retailers are fast falling out of favour due
to concern that high personal debt levels and reluctance among banks to
lend more will squeeze spending in Africa’s biggest economy.
South African retail sales grew by a
smaller-than-expected 1.9 per cent in June, data from the government
statistics office showed last week.
Shares in Shoprite, which are down about
20 per cent this year, gained 3.3 per cent to 166.73 rand in what
analysts said was a recovery from oversold levels and optimism that its
Africa focus would help it ride a slowdown in consumer spending.
“In Shoprite, you have a company that’s
still growing profits and paying dividends even in a tough environment,
and the results were not that far away from the consensus,” said Reuben
Bleeders, an analyst at Cape Town-based Gryphon Asset Management.
The stock is trading close to its
intrinsic value, according to Thomson Reuters StarMine valuation model,
which takes into account the company’s most likely earning trajectory
over the next five years.
Shoprite posted an 11 per cent rise in
headline earnings per share to 675.4 cents in the year to the end of
June, a touch below the 681 cents forecast in a Reuters poll of 11 analysts.
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