South African retailer Shoprite Holdings (SHP) on Tuesday reported diluted headline earning per share of 507.6 cents for the 12 months ended June, up 12.4 percent from the previous year's 451.6 cents.
The board declared a final dividend of 165 cents per share from 147 cents in 2010, an increase of 12.2 percent. This brings the total dividend for the year to 253 cents per ordinary share from 227 cents in 2010.
The I-Net Bridge consensus forecast was for diluted headline earnings per share of 504.0 cents and a dividend of 252.0 cents per share.
Operating profit increased 15.4 percent to 3.90 billion rand while turnover increased 7.3 percent to 72.298 billion rand.
CE Whitey Basson said the business environment during the reporting period presented many challenges to the retail sector.
"Price competition amongst food retailers in a depressed South African market remained fierce. In this climate all the divisions of the group, with the exception of the furniture division, maintained acceptable levels of growth and profitability," he said.
The group's core business, its South African supermarket division, reported positive sales growth of 7.2 percent from 53.367 billion rand to 57.214 billion rand.
It added a net 15 new stores and now trades from 154 supermarkets and 26 Hypers.
Shoprite's supermarket non-RSA division reported sound growth, although this is negated by the continued strength of the rand during the review period.
"While a rand that remained strong, as well as one week less in the reporting period resulted in reduced profitability, the trading margin achieved was close to that of the South African business," it said.
When converted to rand, the turnover of the 135 outlets the group operates outside the borders of SA increased by 2.1 percent compared to the previous year. At constant currencies, these operations grew turnover by 10.2 percent.
The company's furniture division, which operates three chains - OK Furniture, House & Home and OK Power Express - experienced a difficult trading year, contending with deflation of 15.7 percent and even higher in certain product categories.
It increased turnover by 1.9 percent to 3.060 billion rand despite these adverse conditions and continued to grow strongly in terms of new outlets, ending the reporting period with 300 stores of which 30 are outside the borders of SA.
The group said the year under review was also a trying time for most of the OK Franchise division's (OKFD) members who trade all over SA and Namibia as well as in Botswana. It increased turnover by 7.8 percent while trading profit increased due to overhead costs lagging the growth in income.
During the reporting period, Shoprite's pharmacy offering MediRite, increased its number of outlets from 104 to 121 and is budgeting for another 22 in the new financial year.
A major development during the reporting period was the offer made for Metcash's franchise division which will provide OKFD with a further platform to grow its business and franchisees, both in numbers and in turnover. Shoprite said the transaction was ratified by the Competition Authority after year-end.
Looking ahead, the company said it did not foresee present market conditions changing materially in the new financial year.
"Food inflation is expected to rise further although prices are likely to be held in check by the ongoing competition amongst the major food retailers. Competition is expected to further intensify. However, we believe the group is well equipped to deal with the challenges that will confront it in the new financial year," it said.