Pick n Pay profit misses forecasts

South Africa’s second-biggest grocery retailer Pick n Pay posted a 18,4% decline in full-year profit on Monday, missing expectations as results were stung by higher costs and industrial action.

Pick n Pay said diluted headline earnings per share from continuing operations was 186,14 cents in the year to end-February, well below a median estimate of 211,8 cents by 12 analysts polled by Reuters.

The company said headline EPS that excludes stock options or convertible bonds fell 18,3% to 189,35 cents.

While consumers gradually warm up to spending in Africa’s biggest economy thanks to lower interest rates and a fall in food inflation, Pick n Pay has yet to see the benefits as it is spending a chunk of its cash building distribution centres to improve margins.

Pick n Pay — valued at $3,1-billion — said sales rose 5,9% to R51,9-billion, affected partly by a labour strike in October last year.

Shares in the company have slumped nearly 9% so far this year, lagging behind its closest rival Shoprite, which is up 0,42% for the period. – Reuters

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