No issues here, e-commerce booming while grabbing market share through the raging pandemic is all in a day’s work for South Africa’s largest grocer, Shoprite.
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The retailer reported group results for the year ending the 28th of June 2020 on the 8th of September and showed a healthy increase in its key segments over the last year.
Shoprite Holdings Limited (SHP) share overview:
- Sector: Food & Drug Retailers
- Market Cap of R82.69 billion.
- Dividend Yield: 2.20 %
- Price/Earnings: 18.48x
- 52 Week Range low of 9501c and 14550c per share high.
Here are some excerpts from a BusinessTech article:“Shoprite reports record sales”:
“Our core Supermarkets RSA operating segment increased sales by 8.7%, representing a R9.8 billion increase to R122.4 billion. Our Supermarkets Non-RSA continuing operations’ sales declined by 1.4% in rand terms, however, it increased by 6.6% in constant currency terms,” said chief executive officer, Pieter Engelbrecht.” With operating highlights being - “Diluted headline earnings per share (DHEPS) increased by 2.5% to 765.8 cents; Adjusted DHEPS increased by 16.6% to 717.5 cents and Full year dividend, in line with Group policy of 2x DHEPS cover, increased by 20.1% to 383 cents”
Outlook – Preservation seems to be at the order of the day as Shoprite makes a 180 on its cross-border expansion strategy as the retailer is set to quit its Kenyan operation by December.
“Although Kenya contributes a small portion to the group’s R157bn revenues from well over 1,6000 outlets, the decision underlines Engelbrecht’s unwavering commitment to deliver returns on invested capital.” - BusinessDay
Future fit channels like Checkers Sixty60 e-commerce channel is fascinating as we have seen in the U.S Retail space during the COVID-19 pandemic, e-commerce boomed. Sixty60 has shifted grocery shopping online, created 1250 new jobs in the process and gained market share.
The move to the online space with Sixty60 and the Xtra Savings Rewards program, which attracted 4.7 million customers could see the growth trajectory continue.
The local Retail sector was buzzing with activity on the JSE this week, which saw Shoprite Holdings Limited (SHP) share price push higher over 8% by Wednesday. Supported by a much better than expected earnings report and a strengthening Rand on Wednesday were contributing factors.
We need to see more days, weeks like these to negate the negative outlook within the retail sector, which might be short-lived in the short term as macroeconomic factors play out.
- Portfolio Hold (Current)*
- Portfolio Buy opportunity: Neutral**
- WhatsTheBeef long term target price: R 167.00 per share.
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Sources – EasyResearch, Shoprite Holdings Limited, Moneyweb, BusinessTech
Take note: all Shoprite Holdings Limited (SHP) data was taken on the 9th of September 2020.
*Portfolio Hold (Current) refers to investors who already hold the stock within their portfolio.
**Portfolio Buy opportunity refers to Technical level crossed which might imply that the markets behavior would support the outlook and Close above refers to a share price close above a Technical Resistance level.
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Barry is a market analyst with GT247, with a wealth of experience in the investment markets. Now in his tenth year in the markets, Barry "The Beef" Dumas brings a combination of technical analysis and fundamental insights to the table.