Cost cuts help lift Pick n Pay FY profit

Pick n Pay said headline EPS totalled 177.3 cents in the year to end-February.

A Pick n Pay branch in Tyger Valley Shopping Centre. Picture: Tyger Valley Shopping Centre.

JOHANNESBURG - South African grocer Pick n Pay posted a 28 percent rise in full-year profit on Tuesday, helping grow dividend payouts for the first time in four years as cost cuts offset slack consumer spending.

Pick n Pay, the country's third largest food retailer by market value, said headline EPS totalled 177.3 cents in the year to end-February compared with 138.5 cents a year earlier.

Headline EPS, the main profit gauge in South Africa, strips out certain one-off items.

Once a favourite of investors and customers, Pick n Pay has lost ground to rivals such as market leader Shoprite in the last few years after failing to invest in new stores and supply chain, and paying out much of its profit as dividends.

But the 2013 appointment of Richard Brasher, the former UK head of Tesco who put in place a plan to cut costs, is widely expected to help the company better compete.

"The first stage of our recovery plan, which set out to stabilise the business, is now largely complete," Brasher said in a statement.

Pick n Pay, which closed 40 stores over the last two years under Brasher's turnaround plan, lifted dividend by 28 percent to 118.1 cents per share.

Sales grew 6.1 percent to R67 billion.

The sales growth was more than four times slower than the bottom line and highlights an industry-wide downswing as consumers battle rising electricity prices, higher interest rates and high personal debt levels.