Subscribe Login
DE4CC0DE-5FC3-4494-BCBF-4D50B00366B5
Retail

Shoprite's Wiese Says He'll Learn From Failed Steinhoff Talks

Shoprite Holdings Ltd. Chairman Christo Wiese said Africa’s biggest grocer had learned from failed merger talks with Steinhoff International Holdings NV and there are still ways the retailers can work together.

The two companies, in which the billionaire owns stakes of 16% and 23% respectively, called off a plan to combine their African assets on Monday after failing to agree on price. The deal would have created the continent’s biggest retailer, with sales of more than 200 billion rand ($15 billion).

The talks weren’t a waste because the companies “could learn about each other and get to know each other,” Wiese said in an interview after Shoprite’s earnings presentation in Cape Town on Tuesday. There’s “nothing on the table,” he said, when asked if the door is open to another round of talks. “These are two dynamic businesses. Developments are happening all the time.”

For now, Shoprite will explore expansion outside Africa to help maintain growth after the 2,653-store company said profit rose 11% to 2.44 billion rand ($187 million) in the six months through December. Earnings were boosted as poorer South Africans shopped at its cheaper Usave stores, the best performer among the retailer’s three supermarket brands.

The shares rose as much as 5% in Johannesburg after soaring 8.6% on Monday when the plan to merge with Steinhoff was abandoned. That’s the biggest two-day gain on an intraday basis for more than decade. Shoprite is up 11% this year, valuing Africa’s biggest supermarket operator at 109 billion rand.

“I certainly believe that a different form of the transaction can still be proposed and implemented,” Soria Hay, head of corporate finance at advisory firm Bavura, said in e-mailed comments. Sales advanced 14% in the six-month period, including 32% in the rest of Africa, Shoprite said in a statement. The half-year dividend was raised by 15% to 1.80 rand a share.

The company stepped up marketing activity, discounts and cost controls to adapt to weaker economies in sub-Saharan Africa, while lessening the impact of a widespread drought on food inflation by subsidising basic foods, the company said.

“We have structured the business to contend efficiently and profitably under market conditions such as those prevailing currently,” newly appointed chief executive officer Pieter Engelbrecht said. “The second half of the year has started well for us and we are confident this trend will continue.”

South African stores generate almost 80% of Shoprite’s total supermarket sales, demonstrating the need to expand internationally. The company also appealed to wealthier consumers through the expansion of its fresh and convenience food offering, which rose four-fold over the Christmas period.

Shoprite shares rose 0.8% to 189.55 rand as of 1:26 p.m. in Johannesburg.

News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine.

Stay Connected With Our Weekly Newsletter

Processing your request...

Thanks! please check your email to confirm your subscription.

By signing up you are agreeing to our Terms & Conditions and Privacy Policy
Enjoy unlimited digital access for 30 days
Get exclusive access to the latest grocery retail & FMCG news, interviews with industry leading executives, and expert analysis on the trends shaping the sector today
Enjoy unlimited digital access for 30 days
Enjoy unlimited digital access for 30 days
Get exclusive access to the latest grocery retail & FMCG news, interviews with industry leading executives, and expert analysis on the trends shaping the sector today
Enjoy unlimited digital access for 30 days