SA's largest supermarket chain, Shoprite Holdings, delivered what analysts called a disappointing trading update yesterday that could indicate that Pick n Pay may have finally arrested declines.

Shoprite increased turnover 14,4% to R82,7bn in the year to June 30 from the corresponding period last year, while growth on a like-for-like basis was 8,5%.

Competition pressure was becoming evident, Nedbank Securities retail analyst Syd Vianello said. "We are starting to see aggressive, targeted marketing from Pick n Pay and it may indicate they are not losing market share any more. They are starting to do the right things."

Abdul Davids, research head at Kagiso Asset Management, said competition in the local market had intensified while Shoprite's overall like-for-like growth was "disappointing".

Shoprite said internal food inflation averaged 4,9% during the year compared to deflation of 0,1% the year before.

Turnover growth rose in the second half to 15,6% from 13,2% in the first half.

The South African supermarket division, the group's core operation, increased sales 12,9%. The turnover of its 131 supermarkets outside SA rose 25,4% in rand terms. At constant currencies, these operations grew 19,7%.

In a relatively low-inflationary environment, the furniture division grew turnover 11,1%, the company said.

"South African supermarket growth of 12,9% was on the light side of expectations, given the market share gains made by Shoprite domestically. The African turnover growth of under 20% also appears pedestrian, given the focus and investment in Africa," Mr Davids said.

Vestact analyst Sasha Naryshkine said the market had found the trading update disappointing. Shoprite's share price fell as much as 2,4% following its announcement.

In April, SA's second-largest supermarket chain, Pick n Pay, posted a decline in headline earnings per share of 15% in the year to February 29, as investment costs ate into profit. Pick n Pay has made big investments in restructuring over the past few years. Chairman Gareth Ackerman said at the time the company would ramp up growth in the lower end of the market.

Shoprite CEO Whitey Basson, meanwhile, has intensified the company's expansion into Africa. In March, the chain announced an R8bn concurrent share and bond offering aimed at raising funds to expand operations, a move analysts said would help it take on Walmart subsidiary Massmart.

Shoprite is expected to publish its full-year results on August 21.