Angola’s recession and currencies in Nigeria and Zambia dented Shoprite Holdings earnings for H2:18. Ease of doing business deteriorated in the three economies especially in the Q4:18.
Ex South Africa turnover slid 17.24% in Q4:18 negating expansionary efforts across Africa. Cross-border operations have been the Shoprite Holdings group cash cow but 2018 seemed to have painted a different picture depicting economic challenges in these jurisdictions.
This double digit plummet in sales compounded H1 earnings which softened 12% to USD1.4billion.
When things go well in Africa, they really do go well but when they go wrong, entities tend to struggle. Africa brings a lot of volatility
Sasfin Bank senior equity analyst Alec Abraham
Shoprite operates 30 outlets in Angola and sales tumbled 50% in Q4:18 compared to sales growth of 47.0% for the financial year to end-August 2017.
Kwacha and Naira depreciation
Currency volatility in Zambia with the kwacha shaving 20% value and Nigerian naira depreciating 17% against the US dollar dented Shoprite’s sales. Adjusting for Angola, the rest of Africa sales grew 4.40%.
Aside from its African operations, sales in South Africa rose by a quantum of 3.18% in Q4:18. Although this was an improvement from Q3:18’s 1.89% growth, the group said its middle-income consumer base remains under pressure.
This could be seen in Christmas sales categories like back-to-school essentials, which outperformed traditional discretionary purchases such as toys for the first time.
Overall group sales grew by a marginal 0.03% to USD5billion for the H1:2018. Shoprite opened 50 new stores in the period and will add 37 more in H1:19.
Under former CEO Whitey Basson, Shoprite has built a retail empire that sees it operate 308 stores in 14 countries across the continent.
