Shoprite Holdings Limited · JSE:SHP
Shoprite — FY2007 Earnings Presentation
43 slides from Shoprite's earnings presentation, 2007
Slide 1: Stores trading at year-end, liquor outlets
41 • 18 Stores trading at year-end • Opened another 3 stores since June • Shoprite liquor outlets enjoys great acceptance in previously disenfranchised areas • Profitable
Slide 2: Opened 28 stores, now a total of 101
42 • Opened 28 stores now a total of 101 • KFC 400, Chicken Licken 220 • Total sales growth 37% • Like-for-like sales increased 7.3% • Non-RSA trading profit increased 51% • Moved from 10th to 8th position in the Markinor brand survey • Plan to open another 30 stores in 2007/2008 • 10th Anniversary
Slide 3: Sales growth 14.1%, new members
43 • Sales growth 14.1% • 34 new members, 27 non-profitable members closed • Debtors 42 days • Trading profit up 21.1% • Challenge is to establish the OK Brand in higher urban LSM’s
Slide 4: Personnel
Personnel mA tsi SHOPRITE€) 44 % 14
Slide 5: Personnel
Personnel 45 • Group: Sales per FTE +7.9% • New electronic scheduling system in 20 stores show good results • 3 year wage agreement up to April 2009 • 4406 direct new jobs created for the year • Total number of employees – 68 987 (55% females) • Succession program in place,1 518 graduates employed
Slide 6: Personnel Training
Personnel Training 46 • The Shoprite Group is largest training provider in the retail/wholesale sector • 62 208 training interventions in 2006/07 • 625 learnerships completed this year – biggest number of learners to qualify from any one company in the retail sector ever. • 770 managers in training
Slide 7: Learnerships - List
Learnerships - List 47 • TOPP Programme – Chartered Accountants • Certificate in Retail/Wholesales Sales Practices (NQF 2) • Certificate in Furniture Retail Sales Practices (NQF 3) • Certificate in Professional Driving (NQF 3) • Certificate in Retail Supervision (NQF 4) • Certificate in Craft Bread
Slide 8: Information Technology
SHOPRITE ©) Information Technology
Slide 9: Extensive changes in IT environment
IT 49 Extensive changes in IT environment: • New Back Office and Stock Management System installed in 53 stores • New Point of Sale system in all stores by end Sept • Advanced Store Replenishment – 1st store 1 Dec • New Transport Management System – installed in Brackenfell DC
Slide 10: IT (continue)
IT (continue) 50 • Latest version of Warehouse Management System - completed • New Network Traffic Management System – implemented • Deployment of exception based management through Store Portals - still over 7000 reports daily
Slide 11: Furniture
51 Furniture Etienne Nel Executive Director
Slide 12: Furniture Highlights
Furniture 52 Highlights • Sales increased 14.1% to R2.1bn • 18 new stores opened • Business NCA compliant from 1 June 2007 • Debtors book quality remains high, with low arrears
Slide 13: Furniture Trading environment
Furniture 53 Trading environment • Sales negatively affected by introduction of NCA and strikes • Product price deflation continues in the Furniture related departments, with only small inflation in the Appliance and Home Entertainment Departments
Slide 14: Furniture stores opened
Furniture 54 Confirmed Stores Opened Total until June 2008 OK Furniture 12 171 11 OK Power 2 14 - Express House and 4 31 6 Home Total 18 216 17 Target – 233 stores by June 2008
Slide 15: Furniture sales growth
Furniture 55 • Sales growth (Strikes and NCA implementation) 2006 2007 (R’bn) (R’bn) Increased by 14.1% 1,875 2,139 • OK Furniture increased by 14.69% (GEB 4.7%) • House and Home RSA increased by 13.28% (GEB 12.2%)
Slide 16: Furniture sales mix cash and credit
Furniture 56 • Sales Mix – Cash and Credit 2006 2007 Cash 66.23% 67.90% Credit 33.77% 32.10% # of new contracts (2.95% 242 000 249 134 increase)
Slide 17: National Credit Act
Furniture 57 National Credit Act • Furniture Division was ready to go “live” on 1 June 2007 • Reduction of credit participation in June 2007 of 5.76% and 3.02% in July 2007
Slide 18: Furniture segment trading profit
Furniture 58 • Segment trading profit 2006 2007 (R’000) (R’000) Increased by 3.12% 198 633 204 839 • Profits also affected by prolonged Shoprite strike, the Public Sector strike and final NCA implementation in June 2007.
Slide 19: Furniture Debtors Book
Furniture 59 % Debtors Book 2006 2007 Variance Debtors Book Balance R 921 R 1.02 - Increase R99 million million billion Actual Arrears 3.57% 4.04% -0.47 Balance Of Contract Arrears 15.10% 18.44% -3.34 (Affected By Month-End Cut-off) Bad Debt and UFC 19.94% 19.27% -0.67 Provisions
Slide 20: Furniture Prospects & Growth
Furniture 60 Prospects & Growth • Slower growth expected to continue – affected by interest rate increases, rising cost of living, food inflation and NCA affordability issues • Expect some level of product inflation, due to increased raw materials and transport costs and weaker exchange rate • Negat
Slide 21: Furniture Prospects & Growth: Focus Points
Furniture 61 Prospects & Growth Focus Points: • Store expansion • Volume growths through use of discounted pricing • Continual updating and introduction of new products and ranges • Increased imported product participation (margin advantage) • Ongoing staff training and development programmes to pro
Slide 22: Supermarkets
Supermarkets Whitey Basson
Slide 23: RSA Overview
RSA Overview 63 • Supermarkets achieved sales growth of 15% • Total Customer growth of 7.3% • Total Basket Size growth of 7.1% • Productivity growth 7.9% in number of sales items per employee • International Trade up 28% to ± 20 000 containers (inbound) • Distribution Centres – Improved productivity
Slide 24: Supermarkets opened in 2007
Supermarkets opened in 2007 64 Planned: Actual: Brand Difference June 2007 June 2007 Shoprite 24 20 (4) Checkers 9 5 (4) Usave 25 16 (9) Total 58 41 (17)
Slide 25: Current Supermarket Stores
Current Supermarket Stores 65 June 2007 99 Shoprite 24 Checkers CH Hyper USave 366 115 Total: 604
Slide 26: Shoprite
HOLDINGS LTD!
Slide 27: RSA Shoprite Overview
RSA Shoprite Overview 67 • Sales growth 14.4% • Market leader: 297 stores RSA • 12 new stores opened • Basket size growth of 7.2% • Grown customer base 6.5%
Slide 28: Retailer support in informal settlements
Retailer support measured amongst the 68 residents of seven informal settlements Woolworths 10% Q: Who do you support most? Checkers 16% SPAR 20% Pick 'n Pay 39% 60% Shoprite 0% 10% 20% 30% 40% 50% 60% Source: Infusion My Shopping June 2007
Slide 29: Emerging Black Market - Barometer
Emerging Black Market - Barometer 69 75 Q: Stores visited the Soweto and Alexandra past month? 32 21 15 5 6 Checkers or Checkers Shoprite Pick 'n Pay Woolworths Spar Checkers Hyper/Hyperama Source: Roots 2007
Slide 30: Emerging Black Market
Emerging Black Market 70 • We have good penetration • Our responsibility to ensure the correct merchandise and market appeal to retain these customers • We understand the Brand Loyalty and preferences of these customers • There also exist a fair number of myths about this group – Question: Do black
Slide 31: Market Position – The Shoprite Price
Market Position – The Shoprite Price! 71 • 30 million customers per month • More shoppers than any other supermarket - over 10 million individuals (Amps 2006) • Highest customer loyalty - over 39% of customers shop exclusively at Shoprite (Amps 2006)
Slide 32: 72
72
Slide 33: Usave Number of Stores
Usave Number of Stores 73 Jun 06 Jun 07 - Jun 07 - Total Open Closed RSA 68 14 5 77 Non-RSA 24 2 4 22 Total 92 16 9 99
Slide 34: Usave Overview
Usave Overview 74 • Total sales growth 35.2% (GEB 21%) • Basket size growth 15.1% • Customer Growth 16.9% • ROI in excess of 30% • Leaner cost structure than previous year • Making a little too much profit
Slide 35: Usave Overview
Usave Overview 75 • Introduced 71 private label products • This created additional GP of 9.5% • Total basket of private labels now 50/50 with brand leaders • But outperforming brand leaders in: – Vinegar: 100% – Bleach: 73.8% – Frozen Veg: 73% – Sugar: 71% – Oil: 64.9% – Tomato Sauce: 38.8%
Slide 36: 76
76
Slide 37: RSA Checkers Overview
RSA Checkers Overview 77 • Sales growth 15% • 5 new stores opened • Basket size growth 6.7% • Customer growth 7.8% • Trading profit increased by 35.5%
Slide 38: Checkers
Checkers 78 • Transaction growth indicative of Avoiders being attracted • Enhancing our leadership in key categories: – Wine – Cheese – Meat Steakhouse Classic Certified Natural Lamb Boerewors • Perishable basket grew 21% • In Checkers freshness and convenience foods determine perception • Receives
Slide 39: Confirmed store openings until June 2008
2008 79 Confirmed store openings until June 2008 Total RSA Non-RSA 2008 Shoprite 13 3 16 Checkers 11 0 11 Usave 11 2 13 Total 35 5 40
Slide 40: Competitors
Competitors 80 • SPAR • Woolworths • PnP
Slide 41: Economic Prospects
Economic Prospects 81 • Forecasts indicate slow down in GDP • Inflation remains high • Interest rates higher than past 2 years • Rand depreciates
Slide 42: Our focus
Our focus 82 • Maintain level of staff training to improve customer experience • Have our global sourcing keeping everyone honest • Deliver on Freshness product and perception • Expand Non-RSA • Non-RSA – Angola – Cabinda, Huambo, Lubango property – Nigeria – 4 new developments – Ghana – opening Nov
Slide 43: Questions?
Questions?