South Africa-based Shoprite has released a trading update for the first three months of its financial year saying turnover had risen 6.4%. However, the retailer’s strong performance in its home market offset slower growth across the rest of Africa.
Shoprite enjoys strong growth in South Africa
Despite the challenging market and economic conditions in South Africa, Shoprite said that its Supermarket division in the country had enjoyed sales growth of 8.1%. The performance was particularly strong given that Shoprite said internal inflation had stood at only 0.9% during the quarter, versus 7.2% in Q1 2016. The retailer said it had seen ‘significant price reductions of many basic commodity items such as maize meal and potatoes following supply improvements after the earlier drought conditions’.
…But faced falling sales outside its home market
Outside South Africa, though, Shoprite said its supermarkets had seen a contraction in turnover of 1.8%. The retailer blamed the performance on ‘the impact of lower commodity prices and the depreciation of the currencies of the three main countries (Angola, Nigeria and Zambia) where the Group trades on the continent’.
Outlook remains positive
Although Shoprite said ‘consumer spending [was] difficult to predict’, it remained positive about its medium-term outlook. The retailer pointed out how it is ‘making positive progress on its strategic priorities’ and that the deflationary environment should support shopper spending.