Shoprite earnings take knock on non-SA operations
Shoprite’s shares fell to their worst level in more than three years after Africa’s largest food retailer reported a 20% drop in earnings and said it saw no immediate prospects of its troublesome non-SA operations returning to profitability.
In what Group CEO Pieter Engelbrecht described as a “testing year” in SA, the company was also held back by foreign-exchange shortages and currency devaluations in other markets, as well as rampant inflation in Angola.
While sales from domestic supermarkets rebounded in the second half, the international supermarket’s division made a full-year trading loss of R265m.
On Tuesday the share price recorded its worst one-day drop since January 30 2019, plunging 9.25% to R126.86, its lowest level since January 2016, leading other retail stocks lower.
Pick n Pay fell more than 5% to its weakest level since October 2017.
“When a company disappoints, the share price reaction is harsh,” said Razeen Dinath, head of equity at Cadiz Asset Management.
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