Shoprite elevates full-year HEPS by 7.4%

South African supermarket group Shoprite has announced a 7.2% increase in full-year headline earnings and the sale of its furniture business to discount retailer Pepkor. The owner of popular grocery chain Checkers and discount brands Shoprite and Usave declared a final dividend of 445 cents per share following the positive financial results. Pieter Engelbrecht, the CEO of Shoprite, joined CNBC Africa to discuss the company's performance in detail. Engelbrecht emphasized that the growth in market share was driven by an increase in customer visits rather than a strategic effort to lower prices. He highlighted the significant contribution of other income to the company's revenue growth, particularly from investments in digital platforms. Customer behavior data analysis has also played a key role in generating additional income streams for Shoprite. Addressing the impact of inflation on consumer spending, Engelbrecht pointed out that the company's revenue growth has slowed down due to reduced inflation rates. He noted that price-sensitive customers are facing constraints on discretionary income, while affluent customers have more flexibility in their budgets. This dynamic has positioned Shoprite to benefit from market trends affecting different consumer segments. Regarding the decision to sell the furniture business to Pepkor, Engelbrecht explained that the move was driven by a strategic focus on the food business, which has shown significant growth in recent years. The sale allows Shoprite to reallocate capital towards its core operations and leverage existing infrastructure more effectively. The exclusion of the Angola and Mozambique operations from the transaction was based on infrastructure considerations. Engelbrecht also addressed the challenges faced by companies operating in African markets, citing currency devaluation and high inflation rates as ongoing issues. He expressed cautious optimism about the company's future growth prospects in Africa, highlighting the profit contribution from the rest of the continent as a key indicator of performance. In response to questions about energy supply in South Africa, Engelbrecht noted that while reduced load shedding has had a positive impact, the company still faces challenges related to power interruptions and infrastructure issues. He highlighted the need for ongoing investment in power generation to ensure reliable operations. The launch of the unique brand, which offers a specialized clothing line, has shown promise for Shoprite. Engelbrecht mentioned that the brand's expansion will be measured and aligned with customer demand, emphasizing the importance of maintaining a value proposition. Looking ahead, Shoprite plans to continue investing in digital initiatives, store expansions, and store renovations to enhance customer experience and drive growth. Despite economic uncertainties, Engelbrecht expressed confidence in South Africa's prospects and the positive sentiment prevailing in the industry. In conclusion, Shoprite's CEO Peter Engelbrecht remains optimistic about the company's performance and the outlook for the South African economy. The strategic divestment of the furniture business, coupled with ongoing investment in core operations, positions Shoprite for continued growth and success in the retail sector.