Shoprite's first-half profit gained 7.4% despite tougher trading environment

Shoprite Holdings Ltd. said first-half profit increased 7.4 percent after weaker consumer spending i…

Shoprite Holdings Ltd. said first-half profit increased 7.4 percent after weaker consumer spending in its core South Africa market led to a tougher trading environment.

Net income advanced to 1.82 billion rand ($169 million) in the six months through December, compared with 1.7 billion rand a year earlier, the Cape Town-based company said today in a statement. Sales rose 10 percent to 51 billion rand, weighed down by a 7.6 percent rise at South African supermarkets. Revenue across 15 other African countries increased by 15 percent, excluding currency swings.

South African “middle- and lower-income consumers, many of them overburdened with debt, are struggling to make ends meet due to spiralling increases in their living expenses and transport costs,” the company said. “The consequent lack of disposable income has a severe impact on the retail environment.”

Shoprite was among several local retailers that closed stores on December 15 for the funeral of former South African President Nelson Mandela. The decision cost about 260 million rand in sales, Shoprite said.

South African retail sales growth weakened to 3.5 percent in December from a revised 4.4 percent the previous month as rising unemployment and inflation curbed demand.