Shoprite Holdings delivers impressive earnings growth as market share expands

Shoprite Holdings has announced a significant increase in its diluted headline earnings per share (HEPS), projecting a growth of between 15.2% to 25.2% for the 52 weeks ending June 29, as it continued to grow market share for a fifth year in row.

The anticipated diluted HEPS is expected to fall between 1 367.1 and 1 485.7 cents, indicating a robust trajectory. Alongside this, Shoprite's total merchandise sales are projected to rise by 9% to R262.3 billion, with merchandise sales from continuing operations expected to increase by 8.9% to R252.7bn. 

This notable shift in sales figures highlights Shoprite’s strategic focus on its omnichannel growth strategy, anchored by its core South African supermarkets. The disconnect between total and continuing operations reflects the group's recent divestments, including closures and the sale of the furniture businesses in Mozambique and Angola, as well as ongoing sales processes in Malawi and Ghana.

In terms of performance, Shoprite's Supermarkets RSA segment shone brightly, reporting an estimated sales growth of 9.5% over the full year.

This core segment accounted for 84.5% of the group’s total sales, demonstrating its pivotal role in the overall financial health of the company. Specifically, the second half of the year saw a sales surge of 8.5%, reaching R195.04bn.

The non-RSA supermarkets segment also contributed positively, with a 7.6% increase in second half sales, propelling total sales in this area up to R19.33bn. The Other operating segment, which includes franchises and additional retail arms, recorded steadier sales growth of 3.5%, amounting to R17.72bn.

Shoprite's operational expansion has been impressive, introducing 194 main banner supermarkets during the year. These include the opening of 43 Shoprite, 38 Usave, and 29 Checkers stores, alongside numerous new liquor and specialty outlets.

Meanwhile, online sales through the delivery platform Sixty60 skyrocketed by a remarkable 47.7%, aligned with the modern consumer's shifting shopping preferences.

The group's OK Franchise business also performed well, achieving a 6.7% increase in sales, with a net addition of seven stores to end with a total of 615 stores. This reflects a strategic focus on enhancing franchise offerings alongside core supermarket sales.

However, not all developments have been straightforward. The group faced delays in the anticipated sale of its furniture business to Pepkor, with legal proceedings complicating the transaction. Despite these challenges, Shoprite remains optimistic, deeming it 'highly probable' that these operations will eventually be disposed of.

In terms of shareholder engagement, the group repurchased R997 million worth of its shares during the first half of the period, showcasing its commitment to providing value to investors - no shares were repurchased in the second half.

As Shoprite continues to navigate the complexities of the retail market amidst economic challenges, its robust earnings report not only showcases financial strength but also positions the group as a formidable player in the South African retail landscape.

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