Shoprite FY sales up 10.5%, shares rise

(Reuters) – South African grocer Shoprite posted a 10.5 percent rise in annual sales on Monday, helped by a robust showing abroad and sending its shares to their biggest daily gain in more than three months.

Africa's biggest retailer said sales increased to 102.2 billion rand ($9.6 billion) in the 12 months to June, largely in line with analysts' estimates. Sales from its 169 outlets in the rest of Africa grew by nearly 30 percent – three times the growth rate a home.

Retailers in Africa's most advanced economy have been squeezed in recent years as debt-laden consumers cut down on spending, forcing companies to look to the rest of Africa for new revenue.

Shares in Shoprite, which had dropped about 10 percent in the past two months, jumped 3 percent to 163.05, their biggest daily percentage rise since the beginning of April.

One analyst said that some investors may have priced the stock for the worst following a five-month strike by platinum miners and an on-going strike by engineering and metal workers – the lower-income consumers who make up the core of Shoprite's customer base.

"The shares got oversold a little bit in recent weeks but this update came in broadly in line with expectations and that gave some people a reason to pick up it up again," said Alex Sprules, an analyst at brokerage Imara SP Reid.

($1 = 10.6875 South African Rand)