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Shoprite Slows, Woolworths Goes Gangbusters In S. Africa

Shoprite Slows, Woolworths Goes Gangbusters In S. Africa

Sales at South African supermarkets under-performed in 2013 — if you consider 7.6 percent growth as sluggish — but business was much better in the rest of Africa, Bloomberg reports in IndependentOnline.

Shoprite, Africa’s largest supermarket, said it’s looking for growth outside South Africa after first-half profits for 2013 rose 7.4 percent to 1.82 billion rand.

“The board does not expect any improvement in the trading environment within South Africa in 2014,” Cape Town-based Shoprite said in a statement. “At the same time our business outside the borders of the country continues to flourish.”

Shoprite opened 10 new stores in African countries outside its biggest market during the second half of 2013, and another 13 will be in business by the end of June, Shoprite said.

Sales at non-South African supermarkets rose 28 percent, Bloomberg reports. Revenue in 15 other African countries grew by 15 percent, excluding currency swings.

Shoprite stock has slumped 16 percent this year.

“The backbone of Shoprite’s customer base is under severe pressure,” said Andrew Bryson, a derivatives trader at Nedbank Private Wealth in Johannesburg, in a Bloomberg interview.

Comparing Shoprite and Woolworths  Holdings Ltd. presents quite a contrast, Bryson said.

Woolworths, a South African retailer that sells international clothing brands and organic food, reported a 16-percent gain in first-half 2013 sales boosted by demand from from higher-income shoppers, Bloomberg reports.

South African “middle- and lower-income consumers, many of them overburdened with debt, are struggling to make ends meet due to spiraling increases in their living expenses and transport costs,” Shoprite said. “The consequent lack of disposable income has a severe impact on the retail environment.”

Shoprite’s furniture store sales rose 11 percent, compared with a 4.8 percent increase a year earlier in contrast to JD Group Ltd., South Africa’s largest listed furniture retailer and a provider of unsecured loans, which reported a loss in the first-half.

Shoprite was among several local retailers that closed stores Dec. 15 for the funeral of former South African President Nelson Mandela. The decision cost about 260 million rand in sales, Bloomberg reports.