Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      World Bank set to back South Africa’s big energy grid roll-out

      20 June 2025

      The algorithm will sing now: why musicians should be worried about AI

      20 June 2025

      Sita hits back at critics, promises faster, automated procurement

      20 June 2025

      The transatlantic race to create the first television

      20 June 2025

      Listed: All the MVNOs in South Africa – 2025 edition

      19 June 2025
    • World

      Watch | Starship rocket explodes in setback to Musk’s Mars mission

      19 June 2025

      Trump Mobile dials into politics, profit and patriarchy

      17 June 2025

      Samsung plots health data hub to link users and doctors in real time

      17 June 2025

      Beijing’s chip champions blacklisted by Taiwan

      16 June 2025

      China is behind in AI chips – but for how much longer?

      13 June 2025
    • In-depth

      Meta bets $72-billion on AI – and investors love it

      17 June 2025

      MultiChoice may unbundle SuperSport from DStv

      12 June 2025

      Grok promised bias-free chat. Then came the edits

      2 June 2025

      Digital fortress: We go inside JB5, Teraco’s giant new AI-ready data centre

      30 May 2025

      Sam Altman and Jony Ive’s big bet to out-Apple Apple

      22 May 2025
    • TCS

      TCS+ | AfriGIS’s Helen Hulett on how tech can help resolve South Africa’s water crisis

      18 June 2025

      TechCentral Nexus S0E2: South Africa’s digital battlefield

      16 June 2025

      TechCentral Nexus S0E1: Starlink, BEE and a new leader at Vodacom

      8 June 2025

      TCS+ | The future of mobile money, with MTN’s Kagiso Mothibi

      6 June 2025

      TCS+ | AI is more than hype: Workday execs unpack real human impact

      4 June 2025
    • Opinion

      South Africa pioneered drone laws a decade ago – now it must catch up

      17 June 2025

      AI and the future of ICT distribution

      16 June 2025

      Singapore soared – why can’t we? Lessons South Africa refuses to learn

      13 June 2025

      Beyond the box: why IT distribution depends on real partnerships

      2 June 2025

      South Africa’s next crisis? Being offline in an AI-driven world

      2 June 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SevenC
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Wipro
      • Workday
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » News » IT upgrade partly to blame for Shoprite earnings shocker

    IT upgrade partly to blame for Shoprite earnings shocker

    By Agency Staff30 January 2019
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp

    Retail giant Shoprite has in part blamed the implementation of an enterprise resource planning (ERP) system for its earnings shocker in the half-year ended 30 December 2018.

    The group’s shares slumped the most since 1999 on Wednesday after it said first-half earnings dropped by as much as 26%, with South African food deflation and IT troubles compounding weakness in the rest of the continent.

    Headline earnings per share declined between 16% and 26% to as little as R3.89, the Cape Town-based supermarket operator said in a statement after the market closed on Tuesday.

    Supply constraints stemming from industrial action and the deployment of a new ERP IT system resulted in lost sales in the period

    “Supply constraints stemming from industrial action and the deployment of a new ERP IT system resulted in lost sales in the period. Additional labour costs were incurred to ensure our supply chain remained operational and brought up to full efficiency over the festive season,” it said.

    Shoprite has been implementing an ERP system in South Africa based on software from Germany’s SAP for the past few years.

    “The group remains positive about its operational strength, customer support for its brands and continues to make progress on its longer term strategic priorities,” it told shareholders. “The transformational changes we made during the year-long migration to a new IT system were challenging, but the deployment has now been completed. January 2019 has seen the improved trading trend continue and we are confident of an improved second half as the impact of various once-offs continues to ease.”

    Depressed environment

    Shoprite has more than 2 500 stores throughout Africa, yet a considerable majority are in South Africa. That exposes the company to the depressed consumer environment in the country. which particularly affects its core lower-income customers.

    Alongside food-price deflation and rising costs in essentials such as electricity and security, Shoprite struggled with the introduction of the new IT system and some industrial action.

    There’s little sign of any economic improvement either, though the company insists it can rely on customer support for its brands.

    In countries elsewhere in Africa, Shoprite’s problems aren’t new. A massive devaluation in the Angolan currency (and, to a lesser extent, in Zambia and Nigeria) has hurt conversion to the rand and driven up import costs. Meanwhile, rents in many African countries are linked to the US dollar.

    The shares fell as much as 17%, the most since July 1999, and traded 12% lower at R157.37 as of 9.12am in Johannesburg.

    Shoprite struggled with the introduction of the new IT system and some industrial action

    That extended a January decline to 17%, and the stock is down 34% over the past 12 months, compared to a 10% retreat on the FTSE/JSE Africa Food & Drug Retailers Index.

    “Shoprite’s high South African margin has been driven by a formula of low prices in ever-improving stores,” said Charles Allen, an analyst at Bloomberg Intelligence.

    Yet “availability issues, caused by an IT upgrade and strike, have hurt revenue” and “competition has improved, meaning that the company will have to work harder to regain momentum”.

    “Profitability has been affected by South African deflation and consumers under extreme pressure, as well as inflexible costs, many of which are fixed in dollars across other African countries,” said Alec Abraham, an analyst at Sasfin Securities in Johannesburg.  — Reported by John Bowker, (c) 2019 Bloomberg LP, with additional reporting (c) 2019 NewsCentral Media



    SAP Shoprite top
    Subscribe to TechCentral Subscribe to TechCentral
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleAmerica’s message to the world: don’t trust China on 5G
    Next Article Vodacom tells Panyaza Lesufi to back off

    Related Posts

    Who let the dogs order? Sixty60 now delivers for Fido

    18 June 2025

    SAPHILA 2025 – transcending with purpose, connection and AI-powered vision

    13 June 2025

    MVNO boom is reshaping South Africa’s mobile market

    12 June 2025
    Company News

    Making IT happen: how Trade Link gears up to enable SA retail strategies

    20 June 2025

    Why parents choose CambriLearn for online education

    19 June 2025

    Disrupt first, ask questions later – the uncomfortable truth about incident response

    18 June 2025
    Opinion

    South Africa pioneered drone laws a decade ago – now it must catch up

    17 June 2025

    AI and the future of ICT distribution

    16 June 2025

    Singapore soared – why can’t we? Lessons South Africa refuses to learn

    13 June 2025

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2025 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.