Shoprite stabilises sales in sub-Saharan Africa

South African retailer Shoprite, the largest operator of supermarkets in sub-Saharan Africa (SSA), saw the annual rate of decline in its sales in that region slow from -4.9% to -1.5% between Q3 and Q4 of 2019. During the period July-December (the first half of its financial year), sales declined by 3.1%, to ZAR10.8 billion (USD736 million). During FY2019 (the 12 months to June 2019), Shoprite’s SSA sales plunged by 7.7%.
The rand-denominated value of Shoprite’s SSA sales has been impacted by the devaluation of the Angolan kwanza, the Nigerian nairu, and the Zambian kwacha. In constant currency terms, sales rose at an annual rate of 4.8% during the six months to December 2019, up from 0.9% in FY2019.
The Sagaci Research View: At its AGM in November, CEO Pieter Engelbrecht asserted that he would not shirk tough decisions in SSA and did not rule out exiting difficult markets, which was clearly a reference to Angola (Shoprite’s largest international market and its worst performer over recent years).
Shoprite’s latest set of results shows a clear trend towards the stabilisation of its SSA sales but provide no insight on whether these markets have returned to profitability (they lost a combined ZAR302 million or USD20.7 million in FY2019). However, healthy growth in constant-currency sales is an encouraging sign and may imply that Angola is off the chopping block – at least for the moment.
If you want a much more detailed assessment of Shoprite’s performance, growth, and retail model in SSA, Sagaci Research will shortly be publishing the 2020 edition of its Shoprite Retailer Research Report.