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SHOPRITE HOLDINGS LIMITED - Operational update for the six months ended 27 December 2020

Release Date: 15/02/2021 08:30
Code(s): SHP     PDF:  
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Operational update for the six months ended 27 December 2020

SHOPRITE HOLDINGS LIMITED 

(Incorporated in the Republic of South Africa)

Reg. No. 1936/007721/06

ISIN: ZAE000012084 

JSE share code: SHP 

NSX share code: SRH

LuSE share code: SHOPRITE 

("the Group")



OPERATIONAL UPDATE FOR THE SIX MONTHS ENDED 27 DECEMBER 2020

For the six months to 27 December 2020 the Shoprite Group increased

total sale of merchandise by 4.7% to approximately R83.4 billion.

Excluding the impact of the closure of the RSA LiquorShop business due

to COVID-19 lockdown regulations, the Group increased total sale of

merchandise by 6.3%.



                                               % Sales growth over the

                                            corresponding period last year

                                H1 ended    H1 ended    Q1 ended   Q2 ended

Approximate sales from          Dec 2020    Dec 2020    Sep 2020   Dec 2020

continuing operations                Rbn           %           %          %

Total Group (including 

Supermarkets RSA LiquorShop)        83.4         4.7         3.0        6.1

Total Group (excluding 

Supermarkets RSA LiquorShop)                     6.3         6.0        6.6

By Segment:

Supermarkets RSA 

(including LiquorShop)              65.1         5.6         3.3        7.6

Supermarkets RSA 

(excluding LiquorShop)                           7.8         7.2        8.3

Supermarkets Non-RSA                 8.6        (8.4)       (8.4)      (8.4)

Furniture                            3.8        15.7        20.6       11.9

Other operating segments             5.9        10.0         9.9       10.2

Total operating segments            83.4         4.7         3.0        6.1



The following information provides context to the overall sales growth:



Supermarkets RSA

-  The Group's core business, Supermarkets RSA, contributing 78.0% to 

   Group sales, achieved sales growth of 5.6% (like-for-like 4.8%).

-  Supermarkets RSA, excluding LiquorShop sales, achieved sales growth 

   of 7.8% (like-for-like 5.7%). 

-  Checkers and Checkers Hyper reported sales growth of 11.1%. 

-  Shoprite and Usave reported sales growth of 5.6%.

-  The Group's LiquorShop business' sales declined by 21.8%. Due to 

   the COVID-19 nationwide lockdown regulations, the Group's LiquorShop

   business was required to close for trade on Fridays and/or weekends and 

   more recently, close completely. The total number of days our liquor

   business was closed totalled 79 days over the six months: 60 days 

   during the first quarter and 19 days during the second quarter. 

-  Internal selling price inflation measured 4.3%, a result of second

   quarter inflation declining slightly to 4.2% from the 4.4% reported

   for the first quarter.

-  Supermarkets RSA opened a net of 45 stores.



Supermarkets Non-RSA

-  Supermarkets Non-RSA increased sales in constant currency by 0.9% as 

   pre-existing challenges from a macro economic and consumer

   affordability perspective were exacerbated by COVID-19 and its

   associated lockdown restrictions. 

-  Supermarkets Non-RSA's sales declined by 8.4% in rand terms and

   contributed to 10.2% of Group sales. 

-  Supermarkets Non-RSA's net store base was unchanged. 



Furniture

-  The Group's Furniture segment, made up of OK Furniture and House & Home,

   increased sales by 15.7% (like-for-like 17.3%). 

-  Whilst growth remained high overall, growth during the second quarter

   was impacted by an already high base in December 2019.

-  Credit sales participation declined to 11.8% (Dec 2019: 13.7%).

-  The Furniture segment closed a net of ten stores.



Other operating segments 

-  The Group's Other operating segments, comprising OK Franchise,

   Transpharm, MediRite Pharmacies, Checkers Food Services (CFS) and

   Computicket, reported sales growth of 10.0%. 

-  The MediRite Pharmacies and Transpharm business traded well. Both CFS

   and Computicket were negatively impacted by COVID-19 lockdown

   regulations given their reliance on tourism, hospitality, travel and

   eventing. 

-  The Group's OK Franchise division remained resilient, achieving sales

   growth of 8.1% despite the impact of the liquor lockdown restrictions.

   The OK Franchise business added a net of 28 stores.



Update on discontinued operations - Nigeria

The Group communicated previously the decision to sell either all or a 

majority stake in its Retail Supermarkets Nigeria Limited subsidiary. We 

hereby confirm that the terms of sale have been concluded and that the 

transaction has been lodged with the Nigerian Federal Competition and 

Consumer Protection Commission (FCCPC) for approval. Management expects the 

transaction to be approved by the end of the 2021 financial year. 



Voluntary earnings guidance 

The following items impacted the results for the period under review: 

-  COVID-19 related costs in the amount of approximately R180.1 million.

-  The provision for impairment against the Furniture segment's instalment

   debtors book declined to approximately 47.2% (June 2020: 50.5%). 

-  Net expenditure of a capital nature of approximately R327 million. 

-  The Group's effective tax rate reduced to approximately 29.2%.



Furthermore, to facilitate comparison, we have included the calculation of 

an adjusted basic HEPS which excludes the after tax effect of exchange rate 

differences and the impact of hyperinflation. 



                                     Estimated     Restated*       Expected

                                      Dec 2020     Dec 2019          change

                                         cents        cents               %

Earnings including 

discontinued operations:

Basic EPS                       383.7 to 420.9        372.1     3.1 to 13.1

Basic HEPS                      410.2 to 448.4        381.9     7.4 to 17.4

Adjusted basic HEPS**           412.3 to 448.3        360.5    14.4 to 24.4

Earnings from 

continuing operations:

Basic EPS                       375.6 to 411.7        375.2      0.1 to 9.7

Basic HEPS                      400.6 to 438.6        379.0     5.7 to 15.7

Adjusted basic HEPS**           400.1 to 435.7        355.6    12.5 to 22.5



*  Restated for the change in guidance contained in SAICA Circular

   1/2019: Headline Earnings relating to the IFRS 16: Leases rule.

** The adjusted basic HEPS and continuing operations information provided,

   constitutes pro forma financial information in terms of the JSE Listing

   Requirements.



Impact of the Group's pro forma constant currency disclosure

The Group discloses unaudited constant currency information to indicate the 

Supermarkets Non-RSA operating segment performance in terms of sales growth, 

excluding the effect of foreign currency fluctuations. To present this 

information, current period sales for entities reporting in currencies other 

than ZAR are converted from local currency actuals into ZAR at the prior 

year's actual average exchange rates on a country-by-country basis. 



The table below sets out the percentage change in sales, based on the actual 

results for the period in reported currency and constant currency for the 

following major currencies. The total impact on Supermarkets Non-RSA is also 

reflected after consolidating all currencies in this segment.



                                                       Reported    Constant

% Change in sales on prior period 26 weeks             currency    currency

Angola kwanza                                             (39.5)      (15.5)

Mozambique metical                                         (6.1)       (2.9)

Nigeria naira                                              (1.0)       (4.8)

Zambia kwacha                                             (12.7)       15.8

Supermarkets Non-RSA including discontinued operations     (7.4)        0.1

Supermarkets Non-RSA continuing operations                 (8.4)        0.9



Statement on pro forma financial information

The pro forma financial information contained in this announcement, 

which is the responsibility of the Group's directors, has been prepared

for illustrative purposes only and may not fairly present the Group's 

financial position, changes in equity, cash flows or results of

operations. 



The information contained in this announcement has not been reviewed or 

reported on by the Group's external auditors.



Group interim results release, presentation timing and registration link 

The Group plans to publish its 2021 interim results on SENS by 8h00 on 

Tuesday, 16 March 2021. The 2021 interim results webcast presentation will 

follow at 9h00.



Shoprite welcomes all who would like to attend to register for the webcast 

via http://www.corpcam.com/shoprite16032021. Alternatively, registration via 

the company website www.shopriteholdings.co.za will be possible. 



15 February 2021

Cape Town



Sponsor: Nedbank Corporate and Investment Banking



Shoprite Holdings Limited Tel: 021 980 4000

Natasha Moolman - Group Investor Relations Manager

Anton de Bruyn - Chief Financial Officer

Pieter Engelbrecht - Chief Executive Officer


Date: 15-02-2021 08:30:00
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