Shoprite has Pick n Pay on back foot

Shoprite created 95 new jobs with the opening of its new store at Stimela Crossing in Barberton on Thursday, 24 October 2019. The store’s total staff complement is 111, which includes 83 women and 101 youth (between the ages of 18 and 35).

The Shoprite group is firing on all possible cylinders.

Between July and December (technically January 2), it grew sales by 10 percent. Sales in its core South African supermarket business, including liquor, were up 11,3 percent – an astonishing result given the impact of the civil unrest in July, plus relatively low internal selling price inflation of 2,6 percent for the period.

We won’t see a trading update from rival Pick n Pay until late March or early April, given that its financial year runs until the end of this month. Based on trading in recent years, however, it is unlikely to come close to matching Shoprite’s numbers.

The last time it managed to grow turnover by more than 5 percent was in 2019 (long before Covid-19), when it posted growth of 7,1 percent in the year to March 3.

Since then, sales growth has been decelerating. In the next six months (to September), it changed how it accounted for airtime sales, and turnover grew by 4,8 percent (versus a comparable 6 percent, meaning that the 7 percent number was higher than the core growth in retail trnover, excluding airtime/data sales).

It’s been stuck somewhere around 4 percent growth ever since. Double-digit growth is a pipe dream.

Trading margins tell the story

Historically, Shoprite has always enjoyed a far superior trading margin to rival Pick n Pay, but in recent trading the difference is stark.

In the 53 weeks to July 4 last year, Shoprite’s trading margin was 6,1 percent (including the impact of hyperinflation). In the second half (January to the start of July), its trading margin was 6,6 percent. — Reuters.