South African retail giant Shoprite Holdings recently released its results for the financial year ended August 2018. Gross profit increased from R33.8 billion in 2017 to R34.7 billion in 2018. Profit before tax however dipped from R7.6 billion rand in 2017 to R7.3 billion rand in 2018. Profit after tax also dropped from R5.4 billion rand in 2017 to R5.2 billion in 2018.
How did Nigerian operations fare ?
In ZAR (South African Rand) terms, Nigerian operations declined by 1.9%. In Naira terms however, they grew by 4.0%. Shoprite also acknowledged the effects of the foreign exchange crisis and recession in the last few years, on its operations.
Trading in Nigeria continues to be hampered by foreign exchange fluctuations, although Nigerian stores are showing growth in local currency, albeit at reduced margins.
The company also stated that trading in Nigeria had had been stifled by limited product ranges, but the economy was recovering.
GDP figures for the most recent quarter ( three months ended March 2018) show the economy grew by 1.95%. While the rate was positive, it was a drop from the 2.11% recorded in the last quarter of 2017.
80% of sales in Nigeria consist of domestic goods. This was a fall out of a foreign exchange and economic crisis which occurred between 2015/2016 that led to import restrictions, and difficulties in accessing foreign exchange. Plans for several new locations were also halted.
Nigeria’s economy went into recession for the first time in almost 20 years in August 2016 when it contracted by 1.49% in the second quarter of 2016. Growth, however, bounced back into positive territory in the second quarter of 2017 with GDP growth at 0.55%.
Shoprite Holdings was founded in 1979 and is Africa’s biggest retailer. The Group has 2843 outlets across Africa and the Indian Oceans, and employs over 1400,000 staff.
The group’s operations include Shoprite Investments, OK Furniture, Computicket, MediRite Pharmacy and Checkers Food Services.
Shoprite began operations in Nigeria in 2005, and currently has 24 supermarkets.