Pick n Pay first-half profit down

South Africa’s second-largest food retailer, Pick n Pay, reported a 12% decline in first-half profit, hurt by weak consumer demand and stiff competition.

Pick n Pay said on Wednesday headline earnings per share totalled 75,31 cents in the six months to end-August, compared with 85,88 cents a year ago.

Headline EPS is the main profit measure in South Africa and strips out certain one-off and non-trading items.

“Over the past six months we have seen some of the toughest trading conditions in our group’s history, in an economic climate slow to recover from the global recession, a very competitive environment and low inflation,” the company said in a statement.

The company said it expected business conditions to remain tough.

Excluding discontinued operations, earnings fell 7,2%, to 90,17 cents.

Revenue rose 6% to R25,3-billion.

The Cape Town-based company in July said it would sell its underperforming Australian unit, Franklins, for about $183-million, but is still awaiting regulatory approval for the deal.

Pick n Pay said on Wednesday it would sell the stores either separately or in groups if Australia’s unlisted Metcash Trading does not win approval to buy the units.

South African retailers have been under pressure in recent years as consumers battle unemployment and high debt levels, forcing them to cut back on spending.

Growth in South African retail sales unexpectedly slowed in August, data showed this month, highlighting subdued demand from indebted consumers and the end of the World Cup impact.

Pick n Pay could also face increased competition from wholesale retailer Massmart, a takeover target for world’s retail giant Wal-Mart.

Shares of Pick n Pay are up about 3% so far this year compared with a more than 7% gain the JSE Top-40 index of blue chips.—Reuters

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