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SHOPRITE HOLDINGS LIMITED - Operational update for the six months ended 2 January 2022

Release Date: 27/01/2022 09:00
Code(s): SHP     PDF:  
Wrap Text
Operational update for the six months ended 2 January 2022

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 2 JANUARY 2022 

For the six-month period to 2 January 2022 ("the period" or "the six 
months"), the Shoprite Group increased total sale of merchandise by 10.0%
to approximately R91.1 billion. Excluding the impact of the temporary 
closure of the Supermarkets RSA LiquorShop business due to COVID-19 lockdown 
regulations, the Group increased total sale of merchandise by 8.2%.

During the six months, excluding the impact of store closures and reopenings 
due to civil unrest, the Group added a net of 57 stores to its corporate 
supermarket business to end the period with 2 003 supermarkets. The Group's 
OK Franchise business, excluding the one store permanently closed due to 
civil unrest, closed a net of one store to end with 511 stores.

In line with our first quarter reporting, no adjustments have been made to 
the Group's reported sales metrics or growth percentage for the impact of 
the July 2021 civil unrest which directly impacted 231 stores across the 
Group.

In the interests of full disclosure and in accordance with IFRS 8: Operating 
Segments, the Group reports sales by segment and the table below outlines 
this detail:
                                       % Sales growth over the 
                                     corresponding period last year

Approximate sales from 
continuing operations       H1 ended     H1 ended     Q1 ended     Q2 ended
                          2 Jan 2022   2 Jan 2022   3 Oct 2021   2 Jan 2022

                                 Rbn            %            %            %

Total Group
(including Supermarkets 
RSA LiquorShop)                 91.1         10.0          9.3         10.6

Total Group 
(excluding Supermarkets 
RSA LiquorShop)                 85.7          8.2          7.9          8.5

By segment:

Supermarkets RSA 
(including RSA LiquorShop)      72.4         11.3         11.6         11.0

Supermarkets RSA 
(excluding RSA LiquorShop)      67.0          9.1          9.9          8.3

Supermarkets Non-RSA             8.6          8.4          1.9         14.4

Furniture                        3.6         (6.5)       (10.5)        (3.2)

Other operating segments         6.5          8.9          7.3         10.3


The following information provides context to the overall sales growth for 
the six months: 


Supermarkets RSA 

-  The Group's core business, Supermarkets RSA, contributing 79.5% to
   Group sales, achieved sales growth of 11.3% (like-for-like 10.7%). 

-  It is noteworthy that this growth was achieved notwithstanding the
   impact of the civil unrest which severely impacted 189 stores
   (135 supermarkets and 54 LiquorShops) and resulted in additional
   stores not directly impacted being closed for precautionary reasons. 

-  Supermarkets RSA, excluding LiquorShop sales, achieved sales growth
   of 9.1% (like-for-like 9.2%).

-  Checkers and Checkers Hyper reported sales growth of 11.4%.

-  Shoprite and Usave reported sales growth of 7.3%.

-  The Group's LiquorShop business's sales increased by 49.8%. Due to
   COVID-19 nationwide lockdown regulations, the Group's LiquorShop
   business was required to close for 48 days over the six months under
   review (48 days during the first quarter; no closures during the second
   quarter). This compares to 79 days closed for the same reason in the
   prior year comparative period (60 days during the first quarter;
   19 days during the second quarter).

-  Internal selling price inflation measured 2.6% (first quarter 3.3%;
   second quarter 1.9%).

-  At the end of the reporting period the number of stores still closed
   due to extensive damage during the civil unrest totaled 35 (including
   two Checkers Hypers). It is envisaged that six of these will not reopen,
   seven will open before year-end and the remainder should open in the
   next financial year.

-  Outside of the civil unrest closures and reopenings, Supermarkets RSA
   added a net 62 stores during the period to total 1 768 stores.

Supermarkets Non-RSA

-  Supermarkets Non-RSA increased sales in constant currency by 11.4%.
   This performance was underpinned by strong growth from our Zambian
   operations. 

-  In Rand terms, Supermarkets Non-RSA's sales increased by 8.4%. 

-  Subsequent to classifying Kenya, Uganda and Madagascar as discontinued
   operations, the Supermarkets Non-RSA segment is now represented by our
   businesses spanning ten African countries which collectively contribute
   9.4% of Group sales.

-  The segment's store base reduced by five stores due to the sale of our
   Ugandan operations. On a net basis, no new stores were opened and
   Supermarkets Non-RSA ended the reporting period with 235 stores. 

Furniture

-  The Group's Furniture segment, made up of OK Furniture and House & Home,
   reported a decline in sales of 6.5% (like-for-like sales declined by
   3.9%). The segment contributes 4.0% to Group sales.

-  Sales growth improved over the six months (first quarter sales declined
   by 10.5%; second quarter sales declined by 3.2%). Whilst the high base
   from the prior year impacted the whole period, it was more marked during
   the first quarter which also suffered from the civil unrest directly
   impacting 35 stores and resulting in a considerable number of adjacent
   stores being closed.

-  At the end of the interim period, nine stores were still closed due to
   extensive civil unrest damage. It is expected six of these stores will
   reopen within six months and the remainder during our 2023 financial
   year.

-  Outside of the civil unrest closures and reopenings, the segment's store
   base on a net basis increased by five stores over the period to close
   with 428 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 8.9%. In terms of contribution to
   Group sales the segment makes up 7.1%.

-  CFS continued to grow its sales despite continued COVID-19 lockdown
   constraints being imposed on its hospitality industry customer base. 

-  MediRite and Transpharm's sales growth increased notably on the
   comparative six months.

-  The Group's OK Franchise division achieved sales growth of 6.5%. Seven
   stores were impacted by the civil unrest, of these six have been
   reopened and one permanently closed. Outside of this, the store base
   was reduced by a net of one, to end the period with 511 stores.

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's 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 South Africa rand are converted from local currency actuals into 
South Africa rand 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                                              (9.4)       (2.1)

Mozambique metical                                         (7.4)       (9.1)

Zambia kwacha                                              35.3        34.8

Supermarkets Non-RSA including discontinued operations      5.8         9.0

Supermarkets Non-RSA continuing operations                  8.4        11.4

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 invitation and registration link 
Shoprite is currently in its closed period and will release its 2022 interim 
results for the six months ended 2 January 2022 on the JSE Stock Exchange 
News Service (SENS) by 8 am on Tuesday, 8 March 2022. 

The Group's interim results webcast presentation will follow, commencing at 
9h30 am on 8 March 2022.

Shoprite's CEO Mr Pieter Engelbrecht invites all who would like to attend 
the webcast presentation to do so by registering via the Group's website 
www.shopriteholdings.co.za or alternatively via 
https://www.corpcam.com/shoprite08032022. 

27 January 2022

Cape Town

Sponsor: Nedbank Corporate and Investment Banking, a division of Nedbank 
Limited

Enquiries:

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: 27-01-2022 09:00:00
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