Shoprite selling furniture interests to focus on flourishing groceries business
Stephen Grootes talks to CEO Pieter Engelbrecht after Shoprite Holdings posts its full year results.
Customers shopping at Shoprite. Image: Abigail Javier/EWN
Shoprite Holdings reported increased market share in the food retail business on Thursday, but it was the announcement that it's offloading its furniture business to Pepkor that seemed to make the biggest impact.
For the year to end-June 2024, group trading profit increased by 12.4% to R13.4 billion. Group revenue increased by 12% to R246.1 billion.
For Supermarkets RSA, Shoprite's core business in South Africa, sale of merchandise grew by 12.3% to R195 billion.
Headline earnings per share (HEPS) including discontinued operations were up almost 9% to 1 191.4 cents.
Shoprite announced a full year dividend per share of 712 cents, an increase of 7.4% compared to the previous period.
In terms of its divestments, the group is selling its furniture operations including the OK Furniture and House & Home brands.
Pepkor said in a statement that it's entered into an agreement to acquire Shoprite’s furniture business operating more than 400 stores in South Africa, Botswana, Lesotho, Namibia, Eswatini and Zambia.
"...We found ourselves at a crossroad with the business’s future growth and profitability hamstrung by the requirement of a level of investment that would have resulted in us re-directing capital and project management resources away from that currently dedicated to our food retail operations."
"We believe the best outcome for OK Furniture and House & Home is for the business to operate in an environment where its required infrastructure and credit management expertise exists, thus allowing us to focus our resources on what we do best."
- Shoprite Holdings
Talking to Stephen Grootes about this that they 'do best', CEO Pieter Engelbrecht said they're 'elated' by the results that show an increase in market share.
It is a result simply of what they do, he says, not so much what they've set out to do.
"It's a fiercely contested market... The slightest deviation in terms of margin - wastage, shrinkage, cost control - it's very tight."
"We're fortunate to have a global leading trading margin. In South Africa it's running about 6% and for the group at 5.6%; and in general retailers find it challenging to get to 3%."
"That does allow us maybe to prevent irresponsible pricing in the market, but allows us also to give best value at low prices to our consumers, which they clearly appreciate."
- Pieter Engelbrecht, CEO - Shoprite Holdings
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