24th August, 2012
South African supermarket chain, Shoprite, has said it would spend $205 million on property development in Nigeria to overcome the lack of infrastructure and capitalise on rising consumer spending.
The Africa’s top retailer, which reported a 20 per cent jump in full-year earnings, is pushing aggressively into underdeveloped, fast-growing markets on the continent, with a focus on Nigeria, Africa’s most populous country and oil-rich Angola.
But its expansion, like those of other South Africa retailers, has been hampered by lack of shopping malls in most parts of the continent.
“I think we are going to see more and more of these property investments in the rest of Africa because many of these markets have great opportunities, but little or no infrastructure,” said Ron Klipin, a portfolio manager at SA Stockbrokers.
Shoprite said it planned to open nine new stores in Nigeria by the middle of next year, bringing its total to 13, and 21 new stores in Angola.
Wal-Mart Stores Inc. has been slow in its Africa expansion a year after taking 51 per cent stake in domestic retailer Massmart, underscoring the lack of retail infrastructure.
Shoprite missed forecasts by a 20 per cent rise to 607 cents in full-year profit on Monday, as nagging unemployment and rising debt levels put pressure on consumer spending. That was below the average estimate of 617 cents in a Thomson Reuters poll of 13 analysts.
Headline EPS, the main measure of profit in South Africa, excludes certain one-time items. But shares in the company climbed 2.35 per cent to 159.90 rand, extending gains so far this year to 18 per cent and reflecting expectations of healthy returns from its expansion on the rest of the continent.
—Henry Ojelu