Shoprite Holdings Limited · JSE:SHP
Shoprite — FY2009 Earnings Presentation
27 slides from Shoprite's earnings presentation, August 2009
Slide 1: Furniture
Furniture Aubrey Karp Divisional Director 37
Slide 2: Furniture Sales
Furniture Sales • Sales increased by 13.9% to R2,57 billion • OK Furniture and OK Power Express sales increased by 15.5% (Like store growth: 9.6%) • House & Home sales increased by 11.8% (Like store growth: ‐6.6%) • Stats SA furniture and appliance inflaLon: 14.0% • Furniture Division internal inflaLo
Slide 3: Furniture Trading Environment
Furniture Trading Environment • ConLnued slowdown in higher LSM expenditure resulLng from excessive consumer credit in the past (86% credit exposure) • Eroding disposable income affected spending on durables • Price deflaLon in the visual department conLnues • Small inflaLonary increases in the furnitu
Slide 4: Merchandise Sales Mix
Furniture Merchandise Sales Mix Stable Mix 2008 2009 Home entertainment 65% 65% and appliances Furniture, bedding, paLo 35% 35% and carpeLng 40
Slide 5: Sales Mix – Cash and Credit
Furniture Sales Mix – Cash and Credit • Credit parLcipaLon increased across all brands • House & Home credit parLcipaLon growth of 3.6% 2008 2009 Cash 69.7% 67.8% Credit 30.3% 32.2% 41
Slide 6: Trading Profit
Furniture Trading Profit • Trading profit increased 1.5% to R157.5m (2008 ‐ reduced by 24.2%) - Excellent profit growth in OK Furniture and in OK Power Express - Credit business increased in all brands - Sales of imported goods, with bemer margins, increased by 15.8% (parLcipaLon up 3.2%) 42
Slide 7: Trading Profit
Furniture Trading Profit • Profit growths limited by: – Certain above inflaLon expenditure growths – rates and taxes, electricity and transport costs etc – Increased bad debts write‐offs – Increased bad debt provision (due to growth of debtors book) 43
Slide 8: Store Numbers
Furniture Store Numbers Focus on store Confirmed until expansion con,nued Opened Total June 2010 OK Furniture 23 204 8 OK Power Express 0 14 0 House & Home 7 46 2 Total 30 264 10 44
Slide 9: Debtors Book
Furniture Debtors Book 2008 2009 % Variance Debtors R830m R964m 16.2 # of new contracts 238 482 258 017 8.2 • Resultant from 8.2% increase in the number of new contracts and due to an increased average purchase price • Achieved notwithstanding: – A slight increase in the credit applicaLon decline ra
Slide 10: Debtors Book
Furniture Debtors Book 2008 2009 % Variance Actual Arrears 6.9% 8.7% ‐1.8 Balance Of Contract Arrears 28.6% 26.7% 1.9 Bad Debt and UFC Provisions 13.8% 12.9% ‐0.9 • Increased applicaLons for NCA debt administraLon • Zero UFC in South Africa (In terms of NCA, finance charges now calculated daily and d
Slide 11: Outlook
Furniture Outlook • Expect low growth environment to conLnue unLl the end of 2010 - NCA affordability calculaLon - Consumer disposable income pressure • Product prices increased dramaLcally in January 2009 resulLng from increased input costs and weaker currencies • Market compeLLveness limits scope f
Slide 12: Outlook: Future growth drivers
Furniture Outlook Future growth drivers: • Increased footprint: 10 new stores confirmed • Volume growth through discounted pricing • Further range enhancements and product innovaLon • Increased imported product sourcing, sales and parLcipaLon • Enhanced customer service levels 48
Slide 13: Non-RSA Overview
Non‐RSA Overview Whitey Basson Chief Execu5ve Officer 49
Slide 14: Non-RSA Overview
Non‐RSA Overview 2007 2008 2009 Turnover growth 29.4% 38.1% 39.9% Non‐RSA sales parLcipaLon 10.8% 12.1% 13.6% Number of stores 95 100 102 Profit growth >50% >100% >50% 50
Slide 15: Non-RSA Overview
Non‐RSA Overview • High inflaLon although lower than RSA • Net margin is higher than that of RSA • Export volume increased 36% • Shipped 19 650 containers • SADC arrangement improved our price compeLLveness vs non‐compliant vendors 51
Slide 16: Non-RSA Challenges Remain
Non‐RSA Challenges Remain • Lack of global credit inhibiLng property development – 6 confirmed new stores for 09/10 – 3 shopping centre extensions • Lead Lmes remain high (Nigeria 68 days) • Faced with unscheduled construcLon and policy changes … 52
Slide 17: Non-RSA Challenges Remain
Non‐RSA Challenges Remain 53
Slide 18: Personnel
Personnel 54
Slide 19: Personnel
Personnel • ProducLvity per employee improved 12% • 11 000 staff members appointed • Latest Electronic Scheduling System fully deployed • R138m invested in training (35% growth) • Seta Grants: 100% compliance, full rebate received • 93 233 training intervenLons • 1 209 Trainee & Designate Managers fo
Slide 20: Complimentary services
Complimentary services 56
Slide 21: We serve the nation – therefore have the ability to extend our service offering
We serve the na,on – therefore have the ability to extend our service offering 17,746 9,699 9,064 777 Shoprite Group Pick n Pay Group Spar Group Woolworths Group Source: AMPS (Released March 2009) 57
Slide 22: Send money in a hurry?
Send money in a hurry? • Money Markets processed R1.9bn worth of money transfers • Total Money Market increased 36% 58
Slide 23: Travelling? Tickets to the game?
Travelling? • Sold enough flight Lckets to fill 540 boeing 737s and enough bus Lckets to fill 30,000 buses Tickets to the game? • CompuLcket sold enough sport Lckets to fill Newlands 51 Lmes • CompuLcket increased net income 8% 59
Slide 24: Having a party?
Having a party? • LiquorShop sold enough beer to give all 14m Shoprite shoppers a beer • Number of stores increased to 48 • Turnover increased 83% • 82 Licences pending 60
Slide 25: Need medicine?
Need medicine? • We sold enough of our top pain killer to give each Shoprite shopper a tablet ater their beer (14m) • PrescripLons are up 52% • Now have 81 pharmacies trading • Sales increased by 54% (Like store growth 32%) • Margin remains low • Wholesaler acquired, pending approval 61
Slide 26: Chicken burger on the go?
Chicken burger on the go? • Sold over 30m pieces of chicken • Total sales growth 10.1% • Opened 12 stores – total of 125 • Served 1.7m customers 62
Slide 27: Outlook
Outlook • Confirmed 85 store openings (64 Supermarkets) • Job losses • Recession will last longer/Housing Loans • Food inflaLon below 10% • Increased electricity costs and property revaluaLons • Will not pursue unprofitable market share growth • Don’t change your investment amount, change your porvolio