Pick n Pay posts 18% jump in full-year earnings

Other retailers have struggled amid a slump in retail sales as South African consumers cut back to cope with high household debts.

FILE: Picture: Sethembiso Zulu/EWN.

JOHANNESBURG - Retailer Pick n Pay Stores Ltd on Friday reported an 18% jump in full-year earnings, as price cuts helped it attract highly cost-conscious shoppers and cope with the difficult trading conditions that have hit other retailers.

The country’s second-largest grocery store chain, which pitches itself as a more affordable alternative to the likes of Woolworths and Shoprite’s Checkers, said headline earnings per share (HEPS) were at 326.71 cents ($0.2274) for the 52 weeks to end-February, compared with 276.98 a year earlier.

HEPS is the main profit measure in South Africa that strips out certain one-off items.

In a statement, Pick n Pay CEO Richard Brasher thanked his staff for delivering an “outstanding result in a difficult economy”, attributing success to price cuts and efficiency gains.

“This result is built on a clear, long-term strategy to create a leaner and more cost-effective business,” he said, adding that Pick n Pay will also have good years in 2019 and beyond.

Other retailers have struggled amid a slump in retail sales as South African consumers cut back to cope with high household debts, a tax increase and higher prices on basics like fuel. Currency devaluations and trading conditions in markets elsewhere on the continent also hurt.

Pick n Pay said the conditions in countries including Botswana, Zambia and Zimbabwe had been challenging, dragging its earnings from the rest of the continent down 16.2%.

However, this was offset at home, where the company said its Pick n Pay and budget Boxer stores saw turnover rise at a “market-leading” rate of 7.1%.

In 2018, the retailer opened 130 stores and revamped 103. Pick n Pay follows a 52-week retail financial calendar, which requires the inclusion of an additional week every six years. Including the earnings for this extra week, HEPS rose by 25.2%.