Fortunately, this was the only surprise in the results.
After some 50 years of shaping, moulding and influencing the strategic direction of retail giant Shoprite, Christo Wiese is to sell his voting rights, held as deferred shares, back to the company.
The move to simplify the control structure has been cautiously welcomed by investors, but much hinges on the price to be paid. While Shoprite’s memorandum of incorporation lists the value of the shares at 0.1 cents per share, putting the value at just above R30 000, the reality is likely to be somewhat different.“When the Shoprite/Steinhoff/Star deal was being negotiated the deferred shares were valued at R4 billion,” says Wilhelm Hertzog, portfolio manager at Rozendal Partners.
The numbers were torrid as warned, and Engelbrecht went to some length to explain how these arose. He accepted responsibility for Shoprite’s own goals and insisted that the results would not be repeated in the second half of the year.“Our first-half performance is below expectations, but not a reflection of the fundamental strength of the business,” Englebrecht says.
The result was that an estimated 2% of sales growth was lost, equivalent to R1 billion in turnover and R250 million in profit. These issues coincided with the longest period of stagnant inflation in a decade. “We have never had 18 months of consecutive deflation in the history of this business,” says Engelbrecht.
While Africa’s currency woes saw sales decline by 13.3% to R11.1 billion in the half, Engelbrecht remains bullish on Africa’s long term potential.
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