Pick n Pay sees lower profit, shares fall
South Africa’s second-largest food retailer Pick n Pay expects half-year profit to decline by as much as 25%, against tough competition and losses related to the sale of its Australian unit.
Pick n Pay said headline earnings per share for six months to end-August are likely to drop between 10 and 25 percent.
Headline EPS totalled 85.88 cents in the same period a year earlier. Headline EPS, which excludes certain one-time items, is the main measure of profit in South Africa.
Pick n Pay said in July it would sell its underperforming Australian supermarket business, Franklines, for A$215-million, although the finalisation of the deal has been pushed back until November.
After excluding results from discontinued operations, such as Franklins, Pick n Pay said it expects first-half profit to fall by as much as 15%.
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.
The Cape Town-based company could also face increased competition from wholesale retailer Massmart, a takeover target for the world’s retail giant Wal-Mart.
Shares of Pick n Pay fell 1.8% to R42.70, underperforming a 0.5% rise in Johannesburg’s blue-chip Top-40 index.—Reuters