Grocery chain Shoprite’s share price fell as much as 7% before recovering to trade 1.6% lower at R210 at 9.25am after reporting a sharp slowdown in interim sales growth.

Shoprite said it grew turnover 6.3% during the six months to end-December — less than half the 14% it reported in the matching period in 2016.

CEO Pieter Engelbrecht said in the operating update that the slowdown in turnover growth should be viewed in the context of average grocery price inflation decelerating to 0.4% during this reporting period from 7.4% in the corresponding period.

The group’s South African stores grew sales 7.8%, while in the rest of Africa sales fell 0.4% measured in rand. Measured in the currencies of the various countries Shoprite operates, sales grew 1.9%.

Its furniture division reported increased sales of 10.8% while “other operating segments”, mainly driven by the OK franchise division’s performance, saw a growth of 6.7%.

“This is pleasing, given low internal price inflation and in line with the group’s South African supermarket performance,” Engelbrecht said.

Shoprite’s interim results are scheduled for release on February 27.

Source: Business Day