Johannesburg - Pick n Pay Stores [JSE:PIK], South Africa's
second-biggest grocery retailer, reported a 40% decline in first-half profit on
Wednesday, hit by the start-up costs for its newly launched shopper reward
programme and investments in its distribution system.
Pick n Pay said on Wednesday headline earnings per share totalled
54.7c in the six months to end-August, compared with 90.17c a year earlier.
The company warned earlier this month that profit could fall
as much as 45%.
While consumers gradually 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.
South African retailers are also facing tough competition
from Walmart, after the world's biggest retailer took a 51% stake in local retailer Massmart Holdings
[JSE:MSM] in June this year.
Pick n Pay said sales increased 7.4% to R27.1bn.
Shares in the company are down more than 24% so far this
year, lagging a 15% rise in its closest rival Shoprite Holdings [JSE:SHP].