the JSE-listed food retailer with operations in many African countries, posted a 19.6 percent (R1.6 billion) surge in net profit in the six months to December, it was announced on Tuesday.
But the shares of the company were badly battered on the JSE’s early trade on Tuesday, losing 3.5 percent in what traders said was due to profit-taking.
Profit-taking is when investors sell stock to cash in on a sharp rise. This action pushes prices down temporarily. When traders are profit-taking, the implication is that there is an upward trend in the security.
Shoprite has maintained its robust and established growth pattern in the six months to December 2012 by increasing total sales by 13.8 percent to R46.723 billion ($5.2 billion). The company said headline earnings of R1.690 billion ($190 million) were 18.9 percent higher.
The board declared an interim dividend of 123 cents per share which is 12.8 percent above the 109 cents of a year ago.
Whitey Basson, the CEO at Shoprite, said sales were buoyant in the first three months of the period under review but then slowed down in the second quarter when market conditions became increasingly strained.
“This was particularly noticeable in December when the retail sector as a whole experienced a very subdued Christmas season,” Basson said in a statement posted on the JSE’s SENS (Stock Exchange News Services).
“These results were achieved under trying conditions. This is largely due to our on-going and very substantial investments in infrastructure over the last few years which are now producing handsome dividends. The capacity created by our growing network of distribution centres enables us to expand our store footprint at a rapid rate, both within and beyond the country’s borders.”
The company has opened no fewer than 74 supermarkets in the 12 months to December. About 56 of these were inside South Africa and 18 beyond its borders.
The 56 local supermarkets enabled the Supermarkets RSA division to grow turnover by 11.5 percent, surpassing the 8.2 percent growth in the local food retail sector.