Shoprite Holdings Limited · JSE:SHP
Shoprite — H1 2014 Earnings Presentation
13 slides from Shoprite's earnings presentation, February 2014
Slide 1: 30
30
Slide 2: Trading Environment
TradingEnvironment • Salesgrowthbeatofficialfoodinflationof5.2%fortheperiod • SAeconomyfallingbehindotherAfricancountrieswherewetrade Continuedunrestinminingindustry(over2millionmandayslostuptoSept2013) LowGDPgrowthandnoimprovementunemploymentat(24%) 5% Forecast 4.8% 5% GDP%Growth 4% 3.3% 3.4% 4% 3.
Slide 3: Trading Environment: RSA
TradingEnvironment:RSA • Ourshopperprofilerepresentsthepopulation • TheaverageSAconsumernotingreatshape Lowincomeconsumersspend89%ofnetincometoservicedebt, yetneed70%ofincomejusttocoveressentiallivingexpenses (source:BDLive) Accesstonewcreditalsosloweddown FuelandelectricitycosthikesaloneremovedR9.5
Slide 4: Trading Environment: Non RSA
TradingEnvironment:NonRSA IncontrasttoSA,mostNonRSAoperationshadgood macroeconomicsupport • Naturalresourcescontinuetodriveeconomicgrowth Attractingmoreforeigninvestment Filteringdowntoconsumers’incomeandspending • Middleclassdevelopmentandmigrationtothelargecities is drivingconsumerspend • Angola,Z
Slide 5: Group Overview
GroupOverview • NonRSAoperationscontinuetoperformexceptionallydespite paceofpropertydevelopment • RSAsalesimpactedby: Storeclosureson15th December– saleslossofR260m,3%effectonDecembergrowth Storesinminingareacatchmentsunderperformingasaresultofunrest Lackofinfrastructurespendingpost2010 Manynewcompe
Slide 6: Market Share
MarketShare • Opened634storesinthelast5years • SAMarketsharehasreached34%offormalfoodretail SmallgaininmarketshareannuallytoDecember Marketsharedippedmarginallyforthe6monthperiod Competitorsremainedopenon15December • Sevenyearsofuninterruptedmarketsharegrowth 35
Slide 7: Profitability
Profitability • At5.3%ourTradingMarginremainsinternationallycompetitive Top250globalretailersaverage3.1%(source:Deloitte) • Fuelandelectricityratehikesimpactedcostsnegatively • Controllablecostdisciplineswellmaintained • SavedR125minelectricitycostsin5years fromefficiencyinitiatives 36
Slide 8: Invested through the cycle
Investedthroughthecycle • Maintainedourinvestmentfocusonlongtermgrowth: R1,1bnspentonnewstoresandrevamps Overall5.2%spacegrowthfortheperiod Nowtradingfrom2272outlets • Openedanet98newcorporateoutlets in6months 57supermarketsand41pharmacy,liquor,HungryLionandfurnitureoutlets • TheGroupnowemploysatota
Slide 9: 1000th Corporate Supermarket Opened
1000th CorporateSupermarketOpened CheckersZevenwacht owndevelopment 38
Slide 10: Supermarkets
Supermarkets • Shoprite’sLSM47consumeristhehardesthit bycostoflivingincreases SubsidisedthepriceofbasicfoodstuffsbyR20mtohelpconsumer Priceleadershipmaintained,confirmedbyweeklyindependentpricesurveys • Usave continuestogainmarketshare– morethandoubledin5years Acceleratedstoreopeningsconfirmed(31)fo
Slide 11: Supermarkets continued
Supermarketscontinued • Checkers salesgrowthslowedonbackofclosureof15th December Bettercomparable(GEB)storesalesgrowththanShoprite Profitabilitygrowthexceededturnovergrowth • NonRSA salesgrowthof28.1%(14.9%constantcurrencies) Contributes16.1%totheGroup’ssupermarketturnover 26.5%tradingprofitgrowthde
Slide 12: Other Operating Segments
OtherOperatingSegments Turnoverrelativelyflatat0.4%growth • Computicket salesup3.3% Fewerhighprofileliveevents SellR500minflightticketsayear • Pharmacydivisionsalesdown9.4% MediRitesalesup19.8%with2.4mprescriptionsdispensed Transpharm wholesaledeclined10% • CheckersFoodServicessalesgrowth>100% • Liq
Slide 13: Hungry Lion
HungryLion • Rolloutofrefreshedbrandingandstoredesign • NonRSAbusinessshowingstronggrowthat34% 42