Three of South Africa's top retailer reveal strong trading results
Three of South Africa’s biggest retailers have released trading figures in the months running up to Christmas and all have shown strong growth.
Massmart, Shoprite and Woolworthspublish trading updates, retailanalysis.igd.com rounds up how they have performed.
Shoprite said that in the 26-week period to 25 December, total sales rose by 14.0% to ZAR71.3 bn (US$5.3 bn), aided by like-for-like growth of 8.6%.
The retailer said that it remained pleased by the performance of its operations in its home market, where its supermarkets saw total sales rise by 10.7%, boosted by ‘good festive trading’. Shoprite said that in its home market it had seen like-for-like sales grow 7.4%, with internal inflation averaging out at the same figure.
And at its supermarkets outside South Africa, Shoprite said that sales grew between 32.3% and 51.7% at constant currencies – driven by higher inflation and like-for-like sales growth of 14.2%.
Massmart has announced total sales growth of 7.7%, to ZAR91.2 bn (US$6.7 bn) for the 52-week period to 25 December. The pace of sales growth was driven by a rise in comparable store sales of 5.4%, while Massmart estimated product inflation at 6.7%. The retailer said that while there was a slight recovery for its operations in South Africa, this was offset by a decline in sales growth outside its home market.
Woolworths said that in the 26-week period to 25 December group sales rose 6.7%, with the figure boosted by its food sales and the acquisition of Australia-based David Jones.
Food sales increased by 9.5%, with price movement of 9.2%, while the retailer noted that comparable store sales increase by 5.6% and net retail space grew by 7.9%. The pace of sales growth announced by Woolworths underlines a marked slowdown from the previous year, with Woolworths blaming the exclusion of Boxing Day from the first-half figures for part of this.
Cost saving is seen as one of the reasons for the success of Shoprite, according to www.afr.com, which says: “South African shoppers with limited spending money are turning to low-cost supermarket chains such as Shoprite Holdings for cheaper food and eschewing new clothes to counter accelerating inflation.
“Africa’s biggest food retailer on Tuesday reported 7.4 per cent half-year sales growth at South African stores that have been open for more than a year, equal to how much the company raised prices in the period. That outperformed like-for-like food growth at higher-end department store chain Woolworths Holdings as shoppers shunned more expensive foodstuff in favour of cheaper options. For those selling fridges, furniture and clothes, it’s an even bleaker picture.”
“It’s a confidence issue,” Damon Buss, an equity analyst at Electus Fund Managers in Cape Town, said by phone. “Consumers are not spending as easily, they are holding back.”