Shoprite Holdings Limited · JSE:SHP
Shoprite — Q4 2024 Earnings Presentation
54 slides from Shoprite's earnings presentation, Sep 3, 2024
Slide 1: 2024 Results Presentation
2024 Results Presentation For the 52 weeks ended 30 June 2024
Slide 2: Agenda
Operational Review 01 Pieter Engelbrecht Strategy Update 02 Pieter Engelbrecht Financial Results 03 Anton de Bruyn Questions 04 Pieter Engelbrecht
Slide 3: Operational Review
Operational Review Pieter Engelbrecht Chief Executive Officer
Slide 4: Executing with purpose and precision in FY24
Executing with purpose and precision in FY24 Recognised as a Top Employer for Launched new general 2024 by the Top merchandise home Employers delivery service Institute and an Employer of Choice in the SAGEA* Employer Awards Launched Xtra *South African Graduate Employers Association Savings Plus un
Slide 5: Executing with purpose and precision in FY24
Executing with purpose and precision in FY24 17 private label brand awards, Shoprite Cash & Carry launched including 12 same-day bulk online deliveries golds at the Food and Home Awards Proud supporter of Team South Africa Employee Trust payouts surpassed R500 million, Opened 63 net 2 years since la
Slide 6: Industry-leading performance
Industry-leading performance +R25.8bn additional sales Sales Gross profit Trading profit R240.7bn R57.8bn +12.4% +11.7% Sales growth Gross margin Dividend +12.0% 24.0% 712c +6.3% Like-for-like* +7.4% * Like-for-like sales growth constitutes pro forma financial information in terms of the JSE Limited
Slide 7: New customers, bigger baskets and higher volumes
New customers, bigger baskets and higher volumes: 64 months of market share gains Customer visits Basket size Products sold +4.5% +6.9% 7.4bn ZAR +4.5% Market share gains according to NielsenIQ, 52 weeks, June 2024 incl. liquor. Rest of Market universe includes Pick n Pay, Boxer, Spar, Clicks, Woolw
Slide 8: Multi-year platform investment delivering consistent results
Multi-year platform investment delivering consistent results 3-year snapshot: Growth on key metrics FY21 vs FY24 2021 2024 Growth % Growth SALES* R167.8bn R240.7bn +R72.9bn +43.4% OTHER OPERATING INCOME** R2.4bn R4.3bn +R1.9bn +79.2% DIVIDENDS R3.0bn R3.9bn +R0.9bn +30.0% STORE NETWORK* 2 895 3 639
Slide 9: Winning with customers, outpacing competitors
Winning with customers, outpacing competitors Supermarkets RSA sales growth +12.3% (+6.3% like-for-like*) Supermarkets RSA internal inflation vs Official food inflation • Almost 2x the pace of the rest of market** 14% • Sales growth excluding Massmart acquisition +10.5% 13.0% • Checkers remains the
Slide 10: Execution against strategy driving strong growth
Execution against strategy driving strong growth • Significant market share gains supported by: ✓ Customer obsession and operational excellence ✓ Multi-year ‘Smarter Shoprite’ data and tech investments ✓ New/upgraded store experience and better on-shelf availability ✓ Fresh foods development and col
Slide 11: Africa's most accessible and affordable retailer
Africa’s most accessible and affordable retailer INSTANT CASH SAVINGS R16.9bn +24.0% in Xtra Savings discounts in FY24 AFFORDABILITY WIN-WIN-WIN OBSESSION PROMOTIONS 92.3m 35.3% promotional sales R5 products subsidised each year contribution (+2.6pp) Supermarkets RSA (excl. adjacencies)
Slide 12: Winning brand portfolio with distinct customer propositions
Winning brand portfolio with distinct customer propositions Africa’s low-price grocery leader Lowest prices on trusted grocery brands, without RSA store positioning and numbers More affluent compromising on customer service and product quality for price-conscious customers. 283 38 Limited assortment
Slide 13: Winning brand portfolio with distinct customer propositions
Winning brand portfolio with distinct customer propositions RSA store positioning and numbers More affluent Upmarket pet shop specialist stocking premium 155 food and pet accessories. 283 38 Specialist outdoor store with exclusive ranges of outdoor general merchandise including pool, 276 gardening,
Slide 14: Supermarkets RSA (Shoprite, Usave)
& Supermarkets RSA (excl. liquor) LOWEST R99.6bn PRICES Sales (excl. LiquorShop) AFFORDABLE HYGIENIC PRIVATE & FRESH LABEL CUSTOMER 10.7% BASICS & VALUE PROPOSITION Sales growth MORE PROMOTIONAL ASSORTMENT EXCITEMENT 21.5% ONE-STOP SHOP FOR FINANCIAL Private label participation SERVICES (excl. liquo
Slide 15: Supermarkets RSA (Checkers)
& Supermarkets RSA (excl. liquor) DIFFERENTIATED R77.9bn PRIVATE LABEL Sales (excl. LiquorShop) SMARTER BEST ASSORTMENT VALUE CUSTOMER 12.3% VALUE PROPOSITION FRESH Sales growth EFFORTLESS CONVENIENCE & HEALTHY 20.9% PERSONALISED Private label participation (excl. liquor) 12m Xtra Savings members Sh
Slide 16: Supermarkets Non-RSA, Other operating segments & Furniture
Supermarkets Non-RSA, Other operating segments & Furniture Supermarkets Non-RSA Supermarkets Non-RSA trading profit The nine countries delivered strong sales growth of 22.1% in +6.1% 650 R631m constant currencies 600 R594m Sales growth • Customer visits +10.4% 550 500 R479m (excl. hyperinflation) •
Slide 17: Strategy Update
Strategy Update Pieter Engelbrecht Chief Executive Officer
Slide 18: Our Shoprite Purpose
Our Shoprite Purpose Uplifting lives every day by pioneering access to the most affordable goods and services, creating economic opportunity and protecting our planet Shoprite Holdings 2024 Full Year Financial Results
Slide 19: Strategic priorities for long-term growth
Strategic priorities for long-term growth A Smarter Target headroom Winning in the Shoprite opportunities long term 1. A TRULY 4. TRUSTED, 7. UNLOCK CUSTOMER- PROFITABLE ALTERNATIVE FIRST CULTURE PRIVATE LABELS INCOME 2. FUTURE-FIT 5. GROW SHARE IN 8. FORCE CHANNELS AND PREMIUM AND FOR GOOD TALENT F
Slide 20: A truly customer-first culture
A truly customer-first culture Spotlight on • Usave banner represents our extreme customer obsession: pioneering access to affordable essentials (~1 900 product range) • Star performer in RSA brand portfolio with annual sales growing 13.2%, which accelerated to 14.2% in H2 • Hard-discount, no-frills
Slide 21: Enable precision retailing
Enable precision retailing Enhancing SA’s largest customer platform ✓ ShopriteX continues to invest in tomorrow’s retail capabilities BEST REWARDS BEST REWARDS ✓ Award-winning Xtra Savings rewards programme now most used in SA* PROGRAMME IN SA PROGRAMME IN AFRICA ✓ +3.2m new Xtra Savings members in
Slide 22: Enable precision retailing
Enable precision retailing Smarter pricing & promotions Smarter assortment Personalisation New AI pricing engine manages 83k item Category management for core retail 11.5bn personalised product relationships and iterates millions of optimisation: customer-led assortment recommendations across 5 dire
Slide 23: Future-fit digital channels
Future-fit digital channels Exceptional online momentum continues • 1-hour grocery delivery platform, Sixty60, increased sales by 58.1% • Record rates of customer retention and advocacy despite rising competition • 11 681 new jobs created since launch • Now available at 539 locations (+73 sites in t
Slide 24: A sustainable digital advantage
A sustainable digital advantage SA’s largest, most profitable, omnichannel retail platform • New single app for Checkers and Sixty60 rolling out to all users in Sept 2024 • Single B2C platform offering 10k general merchandise products alongside 60-minute grocery and liquor delivery • Promising same-
Slide 25: Unlocking data-driven alternative income
Unlocking data-driven alternative income Shoprite’s Customer Insights Platform embedding customer-first thinking with FMCG partners Retail Media Network monetising our omnichannel marketing platform and connecting advertisers with high-intent audiences through targeted, data- driven campaigns with m
Slide 26: Building lighthouse private label brands
Building lighthouse private label brands • RSA private label sales contribution (excl. liquor) increased to 21.3% (+0.4pp) • Building customer loyalty with differentiated own brands • 35 own brands now each exceed R100m in annual sales • 96% of all customers now buy into private label brands • Homeg
Slide 27: Stronger partnerships
Stronger partnerships Winning together with partners aligned to our customer values • Sales to franchisees increased 23.8% • Checkers introduced as new Discovery Vitality HealthyFood • Increasing franchise market share* partner from Sept 2024 • 608 stores (73 net new stores over 12 months) • Rewards
Slide 28: Global partnerships accelerating innovation
Global partnerships accelerating innovation New W23 Global Venture Capital fund together with four global retailers • Fund will invest US$125m over five years in the world’s most innovative start-ups and scale-ups with the potential to transform grocery retail and address sustainability challenges S
Slide 29: Investing in retail network capacity for long-term growth
Investing in retail network capacity for long-term growth Increasing supply chain capacity Grow store network for proximity advantage • Increasing centralised supply chain capacity through our strategic • Net 292 new stores opened in FY24 partners*, adding 200 000m2 supporting better product availab
Slide 30: Social force for good
Social force for good R233.9m 88.4 tonnes of fresh produce surplus food and harvested in the year from goods donated in the year 248 community food gardens 1.6m nutritious meals served to 7.9m more than 8 490 children meals served by at 124 early childhood 31 mobile soup development centres kitchens
Slide 31: Environmental force for good
Environmental force for good Recycled and reused 67 094 tonnes 98.7% of cardboard and plastic of in-store used packaging is now reusable, recyclable or compostable 47.3m kWh of electricity generated from installed solar PV systems, enough to power 6.5% of our electricity is 8 600 homes now sourced f
Slide 32: Leveraging our ecosystem of value
Leveraging our ecosystem of value Shoprite Holdings 2024 Full Year Financial Results
Slide 33: Financial Results
Financial Results Anton de Bruyn Chief Financial Officer
Slide 34: Financial highlights
Financial highlights Sales Total income Total expenses Trading profit R240.7bn R63.5bn R50.1bn R13.4bn +12.0% +12.1% +12.1% +12.4% +6.3% Like-for-like* EBITDA DHEPS ROIC excl. IFRS 16 Dividend per share R20.5bn +7.4% 16.3% +7.4% +9.3% +4.0% 13.8% 26.0% EPS WACC ROE * Like-for-like sales growth const
Slide 35: Sales unpacked
Sales unpacked Like-for- Change 2024 2023 like Supermarkets RSA Sales % Rm Rm % Brand contribution and sales growth Supermarkets RSA 12.3 195 041 173 634 6.3 Supermarkets Non-RSA 6.1 20 822 19 622 4.3 Furniture 2.3 7 230 7 064 2.0 R77.9bn Other operating segments 21.1 17 718 14 636 11.6 R99.6bn Cont
Slide 36: Supermarkets RSA store expansion
Supermarkets RSA store expansion Space growth (m 2)* Number of 2024: 4.5% Net Number of Confirmed stores movement stores new stores 2023 Store movement 2024 2024 2025 Shoprite 618 1 21 51 20 638 34 Checkers 258 1 26** 25 283 38 Checkers Hyper 38 - 38 1 Usave 441 7 29 22 463 36 71 42 iquorShop 682 71
Slide 37: Trading profit: total income unpacked
Trading profit: total income unpacked 23.3% excl. non-recurring Restated* Margin income relating to loss of profit insurance claim** Change 2024 2023 2024 Continuing operations % Rm Rm % Gross profit 11.7 57 750 51 706 24.0 Other operating income* 15.2 4 307 3 738 1.8 Interest revenue* 8.3 759 701 0
Slide 38: Other operating income analysis
Other operating income analysis Restated* Change 2024 2023 6 % Rm Rm 5 Commissions received* 11.7 1 236 1 107 Sundry income** 20.2 1 186 987 Shoprite Group 1 Delivery recoveries 22.5 768 627 Properties Marketing and media 23.5 473 383 Operating lease income (1.5) 461 468 4 Franchise fees received 10
Slide 39: Trading profit: total expenses unpacked
Trading profit: total expenses unpacked Restated* Change 2024 2023 Continuing operations % Rm Rm Depreciation and amortisation 15.2 7 264 6 305 Employee benefits 13.0 19 242 17 027 Insurance service expenses* 33.8 178 133 Other operating expenses* 10.2 23 434 21 262 Total expenses included in tradin
Slide 40: Trading profit by segment
Trading profit by segment Trading Restated* margin Change 2024 2023 2024 Continuing operations % Rm Rm % Supermarkets RSA 11.0 12 036 10 841 6.2 Supermarkets Non-RSA 6.2 631 594 3.0 Furniture* 82.2 195 107 2.7 Other operating segments 18.5 506 427 2.9 Total continuing operating segments 11.7 13 368
Slide 41: Net finance costs
Net finance costs Restated* Change 2024 2023 Continuing operations % Rm Rm The impact of increasing rates on net finance costs Interest received from bank Rbn account balances 16.8 529 453 Borrowings and other finance charges* 17.7 (704) (598) Lease liabilities finance charges 17.3 (3 602) (3 070) N
Slide 42: Financial overview
Financial overview Borrowings Borrowings to equity US dollar borrowings R6.0bn 21.6% US$8m R6.4bn 24.2% 2.5% 2023 2023 of total borrowings Change in right-of-use assets Net changes in working capital* Net cash +R3.7bn Inventories R3.3bn (R3.6bn) R8.8bn +R4.9bn Trade and other receivables (R1.0bn) +R
Slide 43: Capital spend
Capital spend 2024 2023 2024 2023 Rm Rm 74% Growth capex Rm Rm Growth capex 5 750 4 626 New stores and upgrades 3 999 2 940 Maintaining capex 2 012 2 129 Information technology 1 594 1 534 Total operating capex 7 762 6 755 Supply Chain 157 132 Capex as a % of sales 3.2% 3.1% Trademarks - 20 Proceeds
Slide 44: Inventories
Inventories Inventories as a % of sales (52 weeks) 2024 2023 INVENTORIES from continuing operations % % 2024: R28.4bn Supermarkets RSA 11.8 11.7 Supermarkets Non-RSA 11.6 11.4 2023: R25.1bn Furniture 25.7 24.8 +13.1% +14.6% Other operating segments 6.1 5.6 SUPERMARKETS RSA Total continuing operation
Slide 45: Free cash flow
Free cash flow FREE CASH FLOW CONVERSION RATIO 2024: 75.9% OPERATING CASH CONVERSION RATIO 2024: 117.1% Rbn 20.5 3.3 (0.3) 0.8 (2.0) (3.5) 15.4 (3.4) Effective tax rate: 30.2% (5.8) 2.2 (3.7) (3.1) (0.6) EBITDA EBITDA Income Changes in Capital Asset Lease Free Capital Dividends Net Net Net from from
Slide 46: 2025 Guidance considerations
2025 Guidance considerations Sales Supermarkets RSA selling price inflation for July 2024 measured 3.0% Group plans to add 265 new stores which includes 195 stores in Supermarkets RSA Financial Maintaining total income margin of c26% indicators Cost growth underpinned by: • Staff costs • Electricity
Slide 47: Thank You Questions
Thank You Questions
Slide 48: Transaction activity post year-end
Transaction activity post year-end OK Furniture and House & Home Pingo Delivery (Pty) Ltd Asset transaction Equity transaction • Sale of assets in all jurisdictions, other than Angola and • The Group is in advanced discussions to purchase the Mozambique to Pepkor Holdings Ltd. remaining 50% sharehol
Slide 49: Our Outlook
Our Outlook • Supermarkets RSA sales growth for July continues to reflect positive volume growth despite internal selling price inflation slowing to a 12-month low in July at 3.0% vs July 2023 at 8.6% and certain large categories starting to experience deflation • Outlook on disposable income is pos
Slide 50: Additional Information
Additional Information Anton de Bruyn Chief Financial Officer 54
Slide 51: Financial metrics
Financial metrics 2024 2023 Restated* IFRS 16 ROIC excl. IFRS 16 ROIC excl. ROIC impact IFRS 16 ROIC impact IFRS 16 Rm Rm Rm Rm Rm Rm Trading profit 13 399 (2 947) 10 452 11 919 (2 487) 9 432 Effective tax rate 30.2% 30.2% 30.8% 30.8% Trading profit after tax 9 347 (2 055) 7 292 8 249 (1 721) 6 528
Slide 52: Diluted headline earnings per share (DHEPS)
Diluted headline earnings per share (DHEPS) Change 2024 2023 % cents cents DHEPS continuing operations 7.4 1 245.2 1 159.4 DHEPS discontinued operations (16.5) (58.9) (70.5) DHEPS including discontinued operations 8.9 1 186.3 1 088.9 DHEPS continuing operations 7.4 1 245.2 1 159.4 Adjusted for the i
Slide 53: Adjusted headline earnings reconciliation
Adjusted headline earnings reconciliation Headline earnings DHEPS* 2024 2024 Rm cents Headline earnings including discontinued operations 6 482 1 186.3 Headline loss from discontinued operations 322 58.9 Headline earnings from continuing operations 6 804 1 245.2 Adjusted for the impact of: Shoprite
Slide 54: Items of a capital nature
Items of a capital nature 2024 2023 Continuing operations Rm Rm Notes to the results: Impairment of property, plant and equipment (36) (96) Non-financial asset impairments 2024 by segment Rm Impairment of right-of-use assets (58) (75) Supermarkets RSA 104 Impairment of intangible assets (33) (37) Su