Publications
Partners
Johannesburg - South Africa's second-largest grocer, Pick n Pay Stores [JSE:PIK], reported a largely expected 31% drop in full-year profit on Tuesday, reflecting a costly strategy to win market share and improve its supply chain.
Diluted headline earnings per share totalled 109.6 cents in the year to end-February from 157c.
That was a touch below the 111c forecast by Thomson Reuters StarMine, which gives more weight to estimates from historically accurate analysts.
Pick n Pay is trailing behind rivals such as Shoprite Holdings [JSE:SHP] and Spar Group [JSE:SPP] both operationally and in the stock market due to late investments in the supply chain and the costs from a shopper loyalty programme to protect market share.
CEO Richard Brasher, the former head of Tesco's UK unit who took over Pick n Pay this year, is widely expected to hasten the business turnaround and help it fend off competition from Walmart unit Massmart Holdings [JSE:MSM].
Pick n Pay said sales increased 7.1% to R59.3bn, beating a 5.6% growth rate in a Thomson Reuters poll of 10 analysts.
However, the family-controlled business slashed its annual dividend by a higher-than-expected 35.8% to 84c per share as its trading margin deteriorated.
Shares of Pick n Pay have fallen 6% over the last 12 months, compared with a 12% rise in Johannesburg's All Share [JSE:J203] index.
Pick n Pay shares were trading 1.67% lower
at R41.30 at 8:15am on the JSE.
