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Cape Town - Shares in retailer Pick n Pay [JSE:PIK] slumped as much as 8% in early trade on Friday, despite the company announcing an expected 15% to 25% increase in profits.
The company said in a trade update that it would deliver another improved financial performance for the first half of the 2016 financial year, with earnings per share and headline earnings per share expected to increase between 15% and 25% on the prior year.
The group however cautioned on an "increasingly challenging trading environment", with a slight increase in turnover of 8.5% from 6.1% in the 2015 financial year.
Pick n Pay said it was encouraged by the momentum it was achieving in its turnaround plan, combining greater operational efficiency with an increasingly strong customer offering.
"Market conditions are likely to remain difficult in the second half of the financial year, but the Group’s first half performance provides a solid base on which to deliver," it said.
By 11:36 shares were trading down 5.46% at R63.34, compared with slight declines in rivals Shoprite [JSE:SHP] (-0.67%) and The Spar Group [JSE:SPP] (-0.27%).
The stock traded in a range of R61.63 to R67.90, on a volume of over 1.8 million shares.
The interim results for the 26 weeks to end-August 2015 are expected to be published on October 13.
