South African Shoprite to Open Five Stores In Ghana

Johannesburg - Shoprite believes Africa is a viable growth opportunity, and will be opening four new stores in Angola and five in Ghana during the next year.

CEO Whitey Basson says because consumer preferences are similar to those in the South African market, the group's proven South African business models can be easily replicated, operations are within easy reach, there is no formal opposition, while there is substantial GDP creation in Africa outside of South Africa.

For the year which ended in June, revenue from Africa in stable currency terms was up 32%.

"The group's objective for Africa is to gain a foothold in the most lucrative markets as soon as possible," said Basson.

To date, Shoprite has established operations in Zambia, Uganda, Tanzania, Mozambique, Malawi, Namibia, Botswana, Lesotho, Swaziland, Mauritius, Madagascar, Egypt and Zimbabwe.

During the next year a further 32 stores will be opened. In addition to opening new stores in existing territories, four stores are due to open in Angola, five stores in Ghana and a hyper-store in India, he added.

"Expansion to India presents a valuable opportunity to export the group's proven success in meeting the needs of Indian customers. The market is particularly under-serviced in the formal, low-cost, first-world offering.

"Shoprite is entering the market with a small initial investment, as landlords exist and all international suppliers are already operating in the country," he said.

Operations outside South Africa contributed R2.6bn or 10% of Shoprite's revenue for the year which ended in June compared with R2.3bn a year ago.

The group reported headline earnings per share down 20.1% to 57.6c for the year which ended in June from 72.1c a year ago. It reported an exchange loss of R133m due to the stronger rand, compared with a R24m profit a year ago.

The group's position as the largest food retailer in Africa was further entrenched, with operations now comprising 641 stores in 14 countries employing 66 000 employees.

Basson hinted at the listing of the group's furniture business.

"The group is committed to the continued growth of the furniture business. Initiatives to unlock fair value from the business, which could include a listing, may be considered in future," Basson added.

For stores outside South Africa, Shoprite's objective is to grow revenue by utilising all opportunities that meet its required rate of return on capital employed, in order to realise its ambition of earning 50% of earnings from outside South Africa in the medium term.

Shoprite says it is well placed in all market segments to benefit from anticipated increases in consumer spending following the easing of interest rates and income tax relief, all contributing to improved consumer confidence.