South African-based retailer Shoprite has posted a 19.0% decrease in trading profit in the first half of its financial year, to R3.3 billon (€210 million), while sales were up by just 0.2%, to R75.8 billion (€4.81 billion).
Like-for-like sales were down by 2.7%.
Commenting on its performance, the group reported that while the first-half performance was 'below expectations', it should not be taken as a 'reflection of the fundamental strength of the business'.
EBITDA was down by 12.2% for the half-year period, while diluted headline earnings per share were 398.5 cents – a decline of 24.1%.
"The decline in headline earnings per share for the six months ending December 2018 must be viewed in the context of various critical expansion and technology projects the group has embarked on in the past five years to ensure future growth and modernise our technology landscape," said Pieter Engelbrecht, Shoprite chief executive officer (pictured).
The group reported that economic conditions have left its core customer base 'under significant financial pressure', while currency devaluations have impacted the performance of its operations outside of South Africa.
In addition, investment expenses, including the roll-out of a new SAP ERP system, have affected earnings.
Its core South African operation, which represents around three quarters (74.0%) of total group sales, saw sales rise by 2.6%, with a decline in trading profit of 15.1%.
In the rest of Africa, including the Indian Ocean islands, the supermarket business saw a 13.3% decline in rand terms, although they remained positive at constant currency levels.
"We are a business with a market capitalisation of about R96 billion, over 146 000 employees, thousands of stores, and a network of distribution centres across 15 countries," said Engelbrecht.
"Yes, we have had some hiccups and challenges, and could have done some things better or differently, but we remain a strong, substantial, industry-leading group, bringing affordable products and employment to ordinary South Africans, and, under the circumstances, we are making significant headway."
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.