Shoprite says South Africa generates 85% of group supermarket sales

Shoprite Holdings says South Africa generated 85% of its group supermarket sales during the 52 weeks ended June 28, underscoring how heavily Africa’s largest supermarket chain still relies on its home market despite growth across other African operations.

The South African retailer disclosed this in a regulatory filing on Wednesday, where it also said it expects headline earnings per share from continuing operations to rise by as much as 14.7%, driven largely by stronger sales from its e-commerce business.

The update offers a useful perspective for Nigeria, where Retail Supermarkets Nigeria Limited (RSNL) now operates the Shoprite franchise.

RSNL, backed by local investors including Persianas Group, took over the Nigerian business after the South African parent exited direct ownership, restructuring the operation to adapt to local challenges such as inflation, currency volatility, and rising operating costs.

What they are saying

Shoprite said stronger online sales are helping improve its earnings outlook, with investors responding positively to the retailer’s latest trading update. The company’s shares rose sharply after it projected earnings growth of up to 14.7%.

• Its Sixty60 on-demand digital commerce business recorded a 35% increase in revenue to R25.5 billion for the year, strengthening Shoprite’s competitive position in South Africa’s fast-growing online grocery market.
• The company said its South African supermarkets grew sales by 7.1%, adding R15.2 billion during the period. That segment accounted for 85% of total group supermarket sales, making it by far the largest contributor to the retailer’s revenue base.
• By comparison, supermarkets outside South Africa posted 11% sales growth in reported currency, or 7.1% growth in constant currency, highlighting that the rest of Africa remains a relatively small part of the group’s supermarket business.

Shoprite also said sales at its premium-focused Checkers and Checkers Hyper chains rose 10%, outperforming the 4.3% growth recorded by its Shoprite and Usave brands.

Get up to speed

The relatively small contribution from markets outside South Africa reflects the broader restructuring that led Shoprite to exit direct ownership of its Nigerian business after nearly two decades.

• The transition was completed on June 2, 2021, when Ketron Investment Limited, led by Persianas Investment Limited, acquired Shoprite’s entire stake in its Nigerian operations.
• The transaction shifted the business from direct ownership by the South African parent company to a franchise model operated by Retail Supermarkets Nigeria Limited.

Since then, the Nigerian business has been run independently under the Shoprite franchise, with local management focusing on repositioning the brand in a challenging operating environment.

What you should know

There were recent rumours that Shoprite had shut down operations in Nigeria after reports emerged that some of its stores had been closed.

• However, Retail Supermarkets Nigeria Limited (RSNL), which operates the Shoprite franchise in Nigeria, denied the claims in an exclusive interview with Nairametrics. The company said Shoprite remains operational across the country and is undergoing a restructuring programme aimed at strengthening the business rather than exiting the market.
• According to RSNL, the restructuring is part of a phased turnaround strategy focused on improving store formats, enhancing operational efficiency, and repositioning the business for long-term growth.

The company has also continued with expansion plans, including the opening of new stores in Lagos, despite ongoing challenges such as inflation, exchange-rate volatility, and rising operating costs.