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South Africa's Shoprite Forms Joint Venture With Equities Property Fund

Published on Feb 25 2020 8:39 AM in Retail tagged: Trending Posts / South Africa / shoprite / Checkers

South Africa's Shoprite Forms Joint Venture With Equities Property Fund

South Africa's Shoprite Holdings will transfer its distribution centres and undeveloped land valued at 2 billion rand (€120 million) to a new joint venture (JV) it is creating with Equities Property Fund, the supermarket chain has said.

Shoprite has more than 2,800 stores across Africa and has said it wants to divest some real estate to help its balance sheet.

Real Estate Portfolio

Shoprite Checkers will contribute a portfolio of distribution centres and associated undeveloped land in Brackenfell in the Western Cape and Centurion in Gauteng into the joint venture.

Equities will inject cash of 2.1 billion rand in exchange for a 50.1% equity stake in the joint venture, the retailer said.

Thereafter, the joint venture will acquire Shoprite's Cilmor distribution centre in Cape Town and associated undeveloped land for a cash amount of 1.2 billion rand.

"The joint venture company will manage the portfolio and it will serve as a platform for the future development of the undeveloped land situated at Cilmor and Centurion and for possible future property acquisition and development opportunities," Shoprite said.

Half-Year Earnings

Separately, Shoprite said diluted headline earnings per share (HEPS) fell by 2.6% to 372.4 cents in the 26 weeks ended Dec. 29 from 382.4 cents a year earlier.

Earnings fell short of the 463 cents per share expected by analysts, Refinitiv Eikon data showed.

The owner of Checkers and Usave retail chains said it is battling with currency devaluations in Angola, Zambia and Nigeria.

It said store closures in Nigeria and subsequent reduction in customer count, both during and after the September attacks on foreigners, "resulted in a difficult half with sales declining by 8.1% in constant currency terms".

Sales in rand terms in the group's international operations, comprising 14 African countries, fell by 3.1%. In constant currency terms, sales rose 4.8%.

Trading profit at its African operations plunged 62.3% on a 68 million rand fall in interest income earned on government bonds and bills.

This was mainly due to Angola Treasury Bills that reached maturity during the reporting period, it added.

Overall group sales rose 7% to 81.2 billion rand (€4.95 billion). The group's core business, Supermarkets South Africa, was the star performer.

Sales rose by 9.8% on an overall basis and 6.6% on a like-for-like basis, boosted by liquor sales and its strategy to grow its share of spend in the mid-to-upper segment of the market under its Checkers brand.

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

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