Shoprite Holdings will sell its furniture unit to a smaller rival as Africa’s largest supermarket chain focuses on expanding its specialist clothing, baby, outdoor, and pet stores.
The transaction, announced in conjunction with Shoprite’s financial results for the year ending June 2024, is part of the company’s broader strategy to streamline its business and focus on areas where it sees the greatest potential for growth.
The South African firm will sell the business to Pepkor Holdings for about R3 billion ($168 million), the buyer said in a filing on Tuesday. Cape Town-based Shoprite has also pulled back its main grocery business in several other countries across the continent.
“We found ourselves at a crossroads with the business’s future growth and profitability hamstrung by the requirement of a level of investment that would have resulted in us re-directing capital and project management resources away from that currently dedicated to our food retail operations,” Chief Executive Officer Pieter Engelbrecht said in an earnings statement.
For Pepkor, the continent’s biggest clothing retailer, which has struggled to scale up its business that sells beds, sofas and appliances, the purchase will help boost stores by a quarter to 1 300.
Despite the divestment, Shoprite posted impressive fiscal year results. Group sales surged by 12% to R240.7 billion, with the core South African supermarkets segment alone contributing an additional R21.4 billion in sales. This growth was largely driven by strong performances from Checkers, Checkers Hyper, Shoprite, and Usave, with each brand reflecting robust customer engagement and market positioning.
Sales at Checkers and Checkers Hyper grew by 12.3% for the year, with the addition of 26 new stores and 12 store upgrades.
Meanwhile, Shoprite and Usave experienced a 10.7% increase in sales from a base of R90 billion, reflecting an additional R9.6 billion in consumer spending. This excludes the group’s Shoprite and Checkers LiquorShop business, which achieved a 20% sales increase.
By Bloomberg
