Africa’s largest retailer strengthens margins as store network diversifies

Shoprite Holdings Ltd. is doubling down on its core food business while expanding into specialist clothing, baby, outdoor and pet stores, as Africa’s largest supermarket chain seeks to steadily lift gross margins.

The Cape Town-based retailer reported a gross margin of 24.3% for the year through June, up from 23.9% a year earlier and ahead of analyst expectations. Trading profit rose 16.6%, supported by higher promotional activity than in 2024, according to Bloomberg.

Still, offering deals that are also profitable “across a base of 2,863 corporate-owned and managed stores requires expert execution,” Chief Executive Officer Pieter Engelbrecht said in a statement. “Our customers remain pressured on several fronts, and disposable incomes are stretched.”

Shoprite previously reported full-year net income that topped the average analyst estimate. Shares gained as much as 6% in early Johannesburg trading on Tuesday, trimming the year-to-date decline to 7.9%.

The retailer has grown to become Africa’s leading food chain, expanding into about 15 countries and outpacing rivals such as Pick n Pay and Walmart-owned Massmart.

Over the past five years, the company has been reassessing its long-term strategy in Africa as factors like currency volatility, weaker commodity prices, high inflation, import duties, and dollar-based rentals eroded household incomes and pressured earnings.

In August, Shoprite announced plans to exit Ghana and Malawi, adding to a list of earlier withdrawals from Nigeria, Kenya, the Democratic Republic of Congo, Uganda, and Madagascar.