Shoprite reported a surprise 3.8% fall in annual earnings on Tuesday, citing a currency devaluation in Angola and lacklustre trading in other markets abroad.
Africa’s biggest grocery store chain reported diluted headline earnings per share of 968.7 cents in the year ended July versus a 1,090 cents estimate in a poll of 10 analysts by Thomson Reuters’ I/B/E/S.
Analysts had expected an increase of 8.2%.
Headline EPS, the most widely watched profit gauge in South Africa, strips out certain one-off items.
Sales of the Cape Town-based company rose by 3.1% to R145.3 billion.
Shoprite, which trades in 14 countries in the rest of Africa and Indian Ocean islands, said its local division reported turnover growth of 5.7%, while its non-South Africa operations recorded a decline in sales of 7%.
The company said its Angolan business was hit by a chronic shortage of foreign currency and a devaluation, adding that the Angolan Kwanza had lost 50% of its value against the U.S. dollar since December 2017.
It said other markets outside South Africa “continued to experience lacklustre trading conditions and foreign exchange fluctuations”.
Shoprite made headlines recently when it tried to sue workers in Namibia who went on strike over poor working conditions and pay.
South African unions applied pressure on the chain store, and it eventually pulled its summons.
Shoprite in Namibia had attempted to sue the 98 workers for N$4.5 million (about R4.5 million) after they embarked on a strike for improved conditions and a 20% salary increase in 2015.
Read: Shoprite Namibia pulls summons against workers after SA unions call for boycott
The National Union of Metalworkers of South Africa had called on South Africans to boycott all Shoprite stores.
In 2013, South Africa’s Shoprite Holdings agreed to increase wages for its Zambian workforce by up to 34% after Lusaka threatened to shut down its stores over the pay issue.
Read: Shoprite workers take to the streets in Namibia after being sued for millions
Shoprite had fired its Zambian workforce after employees went on strike for higher wages.
That prompted labour minister Fackson Shamenda to threaten to revoke the grocer’s trading licence.
Earlier this year, the South African Shoprite workforce also embarked on a strike over wages. – Reuters