Shoprite CEO: Where’s Walmart?
Whitey Basson says he’s not seeing any others ‘conquering Africa’ like his own company is.
JOHANNESBURG - Shoprite on Tuesday posted positive results for the first half of 2013, with sales and profits both increasing, sending shares up by just over 1 percent by the day's close.
The company made 5.8 cents on every rand of sales, an 11 percent rise in full-year profit, while its furniture division saw a 4.7 percent growth in a climate where furniture retail has been described as one of the worst sectors to be in.
One of their major announcements, though, was that they would continue their expansion into the African market, with 47 new supermarkets planned.
Shoprite has 153 supermarkets in 16 countries outside South Africa. Those foreign outlets registered a 28 percent jump in sales in the 12 months to the end of June, nearly three times the rate of growth in its home market during the same period.
The bulk of the new stores would be in oil-rich Nigeria and Angola. The company sees scope for 44 new outlets in Nigeria and 21 in Angola in the next three to four years.
CEO Whitey Basson told Bruce Whitfield on 567 CapeTalk/Talk Radio 702's The Money Show on Tuesday night that he has full confidence in their plans, saying he doesn't think the movement of foreign companies like Walmart into the region is a major threat.
"I think I read more than what I see," he said, explaining that he doesn't see people from such companies "in the same hotels or being bitten by the same mosquitoes as I do" when he travels on the continent.
"So, I just read that they're conquering Africa, I'm not seeing much of that at this point of time. It's the flavour of the month, it's nice to say that you're invited to the Princess of Monaco's wedding, but there're not too many people out there really changing the world."
He says South African business as a whole should be looking to Africa for growth opportunities.
"Not just from a Shoprite perspective, I think Africa should be trading with Africa and the South African businesses [trading in Africa] can and are doing quite well."
He said it wasn't as easy for foreign companies to infiltrate the market, saying it took a lot of hard work.
"It would be pretty difficult for someone from America or anywhere in the world to come in [and] sometimes it's easier if you're that big to rather go to a nice place on the French Riviera where you know it's easily done by a second handler."
BREAKING INTO INDIA
Basson admitted that for an African business, in turn, it is harder to expand into the Indian market.
"Let me be quite frank; we're used to the South African or the African environment, we can operate there so the opportunities are good."
But that isn't why his company left India shortly after setting up shop there, he says.
"We left India because the government did not allow retail to develop and you had to have partners and structures which cost a lot of money."
"But once that changes," Basson explained, "it's a very good place to do business. It's got very good systems, everything is working very well and there's lots of educated people that can run supermarkets, so I can never say no is no.
"I wouldn't count that out, in fact I'd say Shoprite will probably be a contender there once the political or government situation changes to the extent that we can go and do business there."
After more than two years as an investor favourite, South African retailers are fast falling out of favour due to concern that high personal debt levels and reluctance among banks to lend more will squeeze spending in Africa's biggest economy.
Retail sales grew by a smaller-than-expected 1.9 percent in June, according to Statistics South Africa, but shares in Shoprite, which are down about 20 percent this year, gained 3.3 percent to R166.73 in what analysts said was a recovery from oversold levels and optimism that its Africa focus would help it ride a slowdown in consumer spending.
*Additional reporting by Reuters