Shoprite Holdings Ltd. is focusing on strengthening its core food business while also diversifying into specialized clothing, baby, outdoor, and pet stores to improve gross margins. The supermarket chain, which is Africa’s largest, reported a gross margin of 24.3% for the year ending in June, surpassing analyst expectations and showing an increase from the previous year. The trading profit also saw a 16.6% rise, driven by higher promotional activity compared to the previous year.
CEO Pieter Engelbrecht emphasized the importance of offering profitable deals across their extensive network of stores, which includes 2,863 corporate-owned and managed locations. He acknowledged the challenges faced by customers, stating that disposable incomes are under pressure due to various factors.
Despite the economic strains, Shoprite exceeded net income expectations for the full year. The company’s shares saw a 6% increase in early trading in Johannesburg, reducing the year-to-date decline to 7.9%. Shoprite has established itself as Africa’s leading food chain, operating in approximately 15 countries and outperforming competitors like Pick n Pay and Massmart.
In response to economic challenges such as currency fluctuations, high inflation, and import duties, Shoprite has been reevaluating its long-term strategy in Africa. The company recently announced plans to exit markets in Ghana and Malawi, following previous withdrawals from Nigeria, Kenya, the Democratic Republic of Congo, Uganda, and Madagascar.
The decision to refocus on core operations and expand into new markets reflects Shoprite’s commitment to sustained growth and profitability in the face of evolving economic conditions across the continent.
