Africa’s biggest grocer Shoprite booked a 9,5% rise in first-half turnover as lower interest rates and tentative economic growth encouraged its mainstay South African consumers to spend more.
The company said comparable store sales were up 2,8% in the six months to end-December, achieved in an internal deflation environment of 1,2% for the period.
Shoprite, which has operations in several African countries including Nigeria, said its South African unit posted an 8,4% rise in sales while turnover from abroad inched up 3%, hit by unfavourable currency swings.
The company’s furniture unit, which has previously been struggling along with its peers as recession-hit customers put off purchases of big-ticket items, grew sales by 4,3%.
Shares in Shoprite have gained more than 45% in the past year, highlighting investors’ hopes that decades-low interest rates and gradual economic recovery will encourage consumers to spend more freely.
But some retailers have been wary in their 2011 demand outlook, citing high household debt and job losses as a building boom ahead of South Africa’s hosting of the soccer World Cup last year winds down.
Growth in South Africa’s retail sales was largely steady year-on-year in October compared with September, but should quicken in coming months as past interest rate cuts filter in to support demand.