Shoprite Holdings Limited

For the half year, sales rose 7.2% to almost ZAR 137 billion, adding ZAR 9.2 billion in sales. Trading profit increased 5.9% to ZAR 7.7 billion, headline earnings per share rose over 7%, and diluted headline earnings per share from continued operations grew 7.9%. South African supermarkets achieved a 6.2% trading margin, while group trading margin was 5.7%; gross profit increased 7.1% and total income rose 6.5% to ZAR 34.8 billion. Cash generated from core operations was ZAR 13.3 billion, capital spend was ZAR 3.9 billion, and the interim dividend increased 7.7% to ZAR 3.07. For the second half, management expects 123 new store openings, full-year gross margin of about 23.9% to 24.2%, trading margin of 5.7% to 5.9% in the current environment, effective tax rate of 27% to 28%, and CapEx of about ZAR 7.5 billion for the full year.

Pieter Engelbrecht framed the quarter as proof that Shoprite’s long-term strategy is working: the group kept gaining customers, volume, and market share while protecting margin in a deflationary environment. He repeatedly emphasized that pricing decisions are consumer-led, not margin-led, and highlighted the company’s investments in supply chain, pricing tools, and data/AI as the basis for execution. His tone was confident and proud, especially around the 6.2% South African trading margin, record festive trading, and the role of the 170,000-person workforce.

Anton de Bruyn focused on the mechanics behind the numbers: 7.2% sales growth on the back of 273 new stores, 2.7% like-for-like growth, and improved disclosure around gross margin by segment. He said costs grew 6.6%, trading margin stayed at 5.7%, and ROE exceeded the 12.3% weighted average cost of capital by 15.5% while adjusted ROIC exceeded WACC by 7.2%. He also pointed to ZAR 13.3 billion of operating cash flow, ZAR 5.4 billion of working-capital benefit, ZAR 3.9 billion of CapEx in H1, and said full-year CapEx should slow to about ZAR 7.5 billion. On the outlook, he flagged expected pressure from lower inflation, but also said finance costs should improve in H2 as lease-base growth slows, and inventory should remain disciplined.

Analysts focused heavily on gross margin, promotional intensity, and whether the company could keep holding its margin while customers trade down. Management said promotional participation in the basket has risen and cannot keep rising indefinitely, but argued that Shoprite’s pricing tools, AI/data investments, and buying discipline let it stay the cheapest or best-value option without sacrificing profitability. Questions also touched on AI use, where Pieter said the company has been building data-science capability for years and is increasingly using AI to make pricing, assortment, and customer decisions more scientific.