/ 18 April 2012

Pick n Pay’s full-year profits fail to meet expectations

South Africa’s number two food retailer Pick n Pay missed expectations after it reported a 15% fall in full-year profit on Wednesday, hit by costs related to its shopper loyalty programme and investments in its supply chain.

Pick n Pay said diluted headline earnings per share for continuing operations fell 15.3% to 157.67 cents in the year to end-February, below the average estimate of 171.52 cents in a poll of 12 analysts by Thomson Reuters.

Headline earnings are the main profit gauge in South Africa and exclude certain one-off and non trading items.

While consumers warm up to spending in Africa’s biggest economy thanks to lower interest rates, Pick n Pay has yet to see the benefits, as it is spending a chunk of its cash to improve its supply chain and protect market share as competition intensifies.

Pick n Pay said sales rose 8.1% to R55.3-billion.

The company plans to enter the Democratic Republic of Congo (DRC) and Malawi in the next 12 months, its chairperson Gareth Ackerman told a Reuters Africa Investment Summit, as the merchant stretches its presence on the continent.

The company declared a final dividend per share of 108.35 cents for Pick n Pay Stores and 52.57 cents for Pick n Pay Holdings. — Reuters