Pick n Pay Stores, a South African supermarket chain, fell the most in more than five months after warning that business conditions remain difficult and reporting first-half earnings that missed estimates.
The shares declined as much as eight per cent, the most since 22 April, and traded 7.5 per cent lower at 62 rand as of 12:22 p.m. in Johannesburg, a one-month low.
Diluted earnings per share excluding one-time items were between 61.09 cents and 66.40 cents a share, Cape Town-based Pick n Pay said in a statement on Friday. That compared with the 69 cents per share estimate of Alec Abraham, an equities analyst at Sasfin Securities in Johannesburg.
The earnings “are below my expectations and shows the company has done nothing to significantly cut costs or improve margins,” Abraham said by phone. Earnings per share excluding one-time items were “lower than I expected,” added Kyle Rollinson, an analyst at Avior Capital Markets.
South African retailers are battling with consumer confidence that remains depressed as shoppers hold back on spending even as fuel prices fall, First National Bank said on Thursday. Unemployment of 25 per cent and almost daily power cuts earlier this year also weighed on households.
Earnings per share increased by between 15 percent and 25 per cent in the six months through August, Pick n Pay said. Revenue growth was 8.5 per cent in the period, compared with 6.1 per cent a year earlier.
The stock has gained 20 per cent this year, valuing the company at 30.7 billion rand ($2.2 billion). Larger competitor Shoprite Holdings shares are down 8.3 per cent this year.
“Retail investors have over the past month pushed up the share and this has been overdone,” Abraham said.
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