Pick n Pay Stores Ltd. first-half profit rose 37 per cent, beating the growth reported by larger South African grocers such as Shoprite Holdings Ltd., as it focused on product availability and reducing stock levels.
Net income increased to 261.9 million rand ($23.66 million) in the six months through August, compared with 191.6 million rand a year earlier, the Cape Town-based company said this week in a statement.
Earnings per share excluding one-time items gained 32 per cent, while sales rose 7.2 per cent. The company raised the interim dividend 32 per cent to 19.6 cents a share.
“Pick n Pay is steadily becoming a leaner, more efficient and more productive business,” Chief Executive Officer Richard Brasher said in an e-mailed statement. “We have reduced stock levels in our distribution centres by two days and reduced the total value of stock by 6 per cent on a like-for-like basis.”
South African retailers have struggled this year as accelerating inflation and unemployment of more than 25 per cent have constrained spending. Shoprite, South Africa’s biggest food retailer, posted slowing full-year profit sales growth in August. Pick n Pay last year hired Brasher, a former director at Tesco Plc, to lead a turnaround of the company after costs spiraled and market share fell.
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The shares increased 1.3 per cent to 53.65 rand as of 9:05 a.m. in Johannesburg, extending the gain for the year to 3.9 per cent. Shoprite has dropped 18 per cent and Woolworths Holdings Ltd. has declined 3.6 per cent.
Pick n Pay opened 46 supermarkets and closed five in the six-month period, bringing its total to 1,117 outlets, and spent 110 million rand improving existing stores.
“Our space growth over the period was behind that of our sector,” the company said. “We are determined that new space should deliver acceptable and sustainable returns.” The company plans to set up 80 new outlets in the second half, accelerating its store-opening program, it said.
The company’s like-for-like sales in Africa outside its home market climbed 7.8 per cent. Pick n Pay, which closed its Mauritius and Mozambique franchise operations last year, plans to open stores in Ghana and is “close to completing our assessment of the opportunity in Nigeria.”
Bloomberg, edited by ESM
