Shoprite Holdings Limited

Reported group sales increased 7.2% to ZAR 270.8 billion. Trading profit rose 8.4% to ZAR 16.2 billion, EBITDA increased 7.7% to ZAR 25.8 billion, and diluted headline earnings per share increased 12.2% to ZAR 15.27. Group gross profit increased 8.1% to ZAR 66.5 billion, with gross margin improving from 24.3% to 24.5%; RSA supermarkets gross margin improved from 25.9% to 26.1%, and RSA supermarkets trading margin rose from 6.5% to 6.6%. Full-year dividend increased 11.8% to ZAR 8.73 per share, and adjusted ROIC was 19.8% versus WACC of 11.5%. Forward guidance: management said they target about 6% trading margin again in FY2027, expect effective tax rate of 26% to 26.5%, inventory/sales of 11.7%, and capital expenditure of about ZAR 7.7 billion, below 3% of sales. They also confirmed 211 new store openings already for FY2027 and noted FY2027 will be a 53rd-week year.

Pieter Engelbrecht framed the year as proof that Shoprite is “winning through customer focus and relentless execution,” highlighting resilient growth despite low inflation and deflation in many categories. He emphasized volume-led growth, price leadership, smarter use of data and AI, and the strength of the company’s omnichannel model, especially the combination of stores, Sixty60, and adjacent businesses on a single platform. His tone was confident and proud, especially around customer visits, market share gains, supply chain performance, and the ability to keep lowering prices in key items while still expanding margins.

Anton de Bruyn focused on disciplined cost control, margin expansion, and strong cash generation. He said the expense margin held at 20.1%, trading profit reached ZAR 16.2 billion, EBITDA was ZAR 25.8 billion, and gross profit was ZAR 66.5 billion, with the gross margin improving to 24.5%. He also cited ZAR 24.2 billion of core cash generated, ZAR 12.9 billion in cash and cash equivalents at year-end, ZAR 6.8 billion of growth and maintenance capex, and ZAR 7.7 billion capex planned for FY2027; lower finance costs, aided by about a 100 bps reduction in borrowing rates, were another positive.

Analyst questions centered on what is driving Sixty60 growth, whether the business is cannibalizing stores, how the company thinks about like-for-like sales, and what is behind the gross margin improvement. Management said Sixty60 growth is being driven by reliable execution, high pick rates, fast delivery, and the ability to combine food, pharma, general merchandise and other services into one checkout and one delivery. On like-for-like sales, Pieter said the concept is less useful in an omnichannel model where store footprints shift and digital is integrated with physical retail, and he rejected the idea that cannibalization is hurting returns, saying trading density has increased. On margins, management pointed to low inflation/deflation dynamics, data-rich pricing tools, and better promotion management.