Listed retailer Shoprite Holdings, the largest food retailer in Africa with a turnover of over R22-billion, is increasingly focusing on expansion outside of its home base of South Africa as a basis for earnings growth.
The company now has 46 supermarkets in 11 different countries on the African continent outside of South Africa, and is also seriously looking at expanding into Ghana and some other African countries in the new financial year. The group expected to build at least three stores in Ghana.
Shoprite's African division contributed 10.4% or approximately R2.3-billion to group turnover for the year ended June 30, 2002, as against 8% in 2001.
According to Basson, the company had incurred 46 million rand in set-up costs across its existing operations in Egypt, Tanzania and Uganda, but still saw a 42% return on investment before certain losses.
The group's Egyptian greenfields business, where it has a 70% stake in a joint venture with a local company, had incurred a R20-million loss for the year after it opened four new stores and closed one of them within three months, Basson said.
"It's better to start out small and expand gradually to limit losses as one starts to understand the market," he explained.
"But we're confident that if we do make a loss in the coming year in Egypt it will be a small one."
The group had identified three sites for new stores to open in the coming year, and its medium-term goal was to have 25-30 stores in Egypt.
Shoprite also had plans to move into Angola, Mauritius and Madagascar in the new financial year, Basson said. The group expected to build at least one store in Angola, and set up partnerships in Mauritius and Madagascar to "get things going" in those tow island nations this year, he elaborated.
The company was also looking at setting up shop in Equatorial Guinea and at further expansion in Zimbabwe, despite that country's 120% inflation rate.
However, the most exciting prospect for Shoprite over the medium-term appeared to be the Indian market.
"We are very excited about India, where there are very few retailers," he enthused. "The government now allows 35%-40% partnerships, and we are looking for partners there now.
There are great opportunities for us since we have excellent knowledge of the market from the Indians of Natal, as well as the advantage of it being an English-speaking country."
He pointed out that the gross domestic product (GDP) of India was R542.6-billion, compared to South Africa's GDP of R111.7-billion and R410.7-billion for the rest of the African continent.
Shoprite on Tuesday reported a 24.7% rise in headline earnings per share for the year ended June 30, 2002, to 70.7 cents per share from 56.7 cents per share a year earlier.
It declared a final dividend of 14.5 cents per share, up from 11 cents per share in 2001, for a total dividend for the year of 25.5 cents per share.
