Shoprite shares in dramatic U-turn after update

Shoprite’s share price [JSE: SHP] jumped by 6% in opening trading on Monday after the group reported turnover growth of more than 7% in the three months to September. But by later afternoon, its share price was down almost a percent.

In South Africa, the Shoprite group’s turnover rose by 10.3%, with prices at its shops rising by 3.0% over the period.

“Whilst all three of our supermarket brands traded well, our hard discounter format Usave led the growth,” the company said in a statement on Monday.

But turnover from African countries outside of South African fell by 4.9%, with its Nigerian business taking a hit due to retaliation attacks on its stores following xenophobic violence in South Africa.

 “Management is assessing the performance of the Supermarkets non-RSA segment, with specific reference to the group’s return on capital invested in Africa,” Shoprite said, seemingly indicating that it may freeze more investment, or even cut its losses, in some African markets.

While the Shoprite group has 10 fewer furniture stores following the quarter, it added 10 new Liquorshop outlets to reach 500 stores. It opened eight Usaves, with half being the smaller eKasi “spaza shop” format, four Shoprites and three Checkers stores.

The Usave eKasi container shops.

                                     A Usave eKasi container shop.  

Shoprite signed up more than one million members for its new Checkers shopper card programme in a week, and says its new flagship Checkers store in Sandton City has surpassed expectations.

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