February 21, 2017 / 5:59 AM / in 9 months

South Africa's Shoprite posts 15.5 pct jump in half-year profit

JOHANNESBURG, Feb 21 (Reuters) - South African retailer Shoprite posted a 15.5 percent jump in half-year profit on Tuesday, buoyed by its operations in Angola and Nigeria.

Shoprite, which generates more than a fifth of its sales outside its home market, reported diluted headline earnings per share of 460 cents for the six months to end-December, compared with 398.2 cents a year earlier.

The firm’s two important growth markets of Angola and Nigeria experienced a shortage of foreign exchange as oil revenues remained under pressure, affecting economic growth.

But Shoprite said it was able to fund its stock requirements from its external balance sheet and kept shelves stocked while many other traders in the region struggled.

“During the reporting period the customer base of the group’s 29 supermarkets in Angola grew by 70 percent and that of Nigeria’s 23 outlets by 56.3 percent,” Shoprite said in a statement.

In South Africa, by far still the largest of the retailer’s 15 African markets, sales grew 14 percent to 71.3 billion rand ($5.45 billion), while sales outside its home market advanced 32.2 percent to 12.9 billion rand.

Africa’s most advanced economy is expected to grow at a faster pace in 2017, but it will have a minimal effect on the financial wellbeing of Shoprite’s primary target market, the firm said.

“The high levels of unemployment are bound to persist with continued consumer indebtedness and shrinking disposable income,” Shoprite said.

The retailer, which also runs the Checkers and OK Furniture chains, mostly targets lower to middle income shoppers with its no-frills Shoprite and USave stores and has boosted promotional activity to support sales, it said.

“To sustain growth both within South Africa and beyond its borders, the group opened a net 147 new stores during the past 12 months and at the end of the reporting period was trading from 2,653 outlets,” Shoprite said. ($1 = 13.0708 rand) (Reporting by TJ Strydom; Editing by Amrutha Gayathri)

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