By Janice Kew for IOL
Shoprite Holdings Ltd. started a review of supermarket operations outside South Africa and would consider exiting certain countries if that would help reverse regional sales declines.
Africa’s biggest grocer reported a 4.9% fall in third-quarter revenue when its main market is excluded, the Cape Town-based company said at the start of its annual general meeting on Monday. Weaker currencies weighed on performance and the Nigerian business was affected by xenophobic attacks — a response to violence in South Africa against immigrants from elsewhere on the continent.
“We are not scared to take the hard decisions,” Chief Executive Officer Pieter Engelbrecht told investors, adding that leaving certain markets would be considered. Other measures including cost reductions are underway, he said.
The performance contrasted sharply with improved trading in South Africa, where quarterly sales jumped by 10% even as Shoprite’s main lower-income customers battle with the impact of an economic showdown. Chains including Checkers and U-Save are benefiting from a new IT system and the revamp and opening of new stores, the retailer said.
The shares rose 0.6% to 139.04 rand as of 11:50 a.m. in Johannesburg, valuing the company at 82 billion rand ($5.6 billion). The stock has fallen 27% this year.
Shoprite reported the update at the start of its annual general meeting, where former billionaire Christo Wiese was re-elected as a non-executive director despite some investor pressure over his three decades as chairman. Shareholder All Weather Capital had last week nominated former Pepkor Ltd. head Jan le Roux as a director to try and reduce Wiese’s influence, though he received just 16% support.
The makeup of the board will change over the next year, Wiese said at the AGM, while more attention will be given to succession planning. A decision on whether he continues as chairman will be taken later on Monday.