RetailAnalysis
02 March 2016
South Africa results: Massmart, Shoprite

We round up the key numbers from the results statements from South Africa-based Massmart and Shoprite.

Shoprite announces robust H1 results

Shoprite saw sales rise 8.8% to ZAR62.5 bn (US$4.0 bn) in the first six months of its financial year, with second quarter sales rising by 10.6% versus 6.7% in the first quarter. The increase in turnover was aided by internal food inflation of 2.2%, which it noted had more than halved when compared to the same period in 2015, and the opening of a net 74 new stores.

The retailer said turnover rose 7.2% at its supermarkets in South Africa, which it said was positive given the weak macro-economic environment ‘in which the effects of a weak currency and the devastating drought were increasingly being felt’. To counter the effect of these developments Shoprite said it ‘continued subsidising basic food stuffs to assist customers, [while] Black Friday and other tactical promotional activities lifted sales without impacting overall gross margin’. Outside South Africa Shoprite saw sales rise by 15.2% and by 23.5% in constant currencies despite the economic challenges brought on by the low oil price in the key countries of Angola and Nigeria.

Massmart: good growth in 2015

Reporting full year results, Massmart said total sales rose 8.4% during 2015 to ZAR84.7 bn (US$5.4 bn), driven by comparable store sales growth of 6.7% and product inflation 3.0%. The retailer said that the performance underlined its ‘continued good volume growth’, which came despite a ‘deteriorating South African consumer economy, [which has] unfortunately… weakened considerably’. Massmart said sales of general merchandise and DIY products slowed at the end of the financial year, while ‘food sales’ growth accelerated’.

The retailer’s chief executive, Guy Hayward, said that shoppers are ‘travelling less, less often and less far to go to shops’ as transport costs remained comparatively high as the depreciation of the rand offset the positive effect of lower fuel prices globally, while basket sizes are smaller than they were in 2014. Outside of South Africa, Massmart said sales rose 13.8% in local currencies (12.6% in Rand terms), aided by comparable sale growth of 5.6%.

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