SOUTH AFRICA – Pick n Pay, the second largest supermarket chain store in South Africa has said it expects its half-year diluted headline earnings per share to increase by up to 85% largely due to cost savings from staff layoffs made last year.
According to Reuters, the retail chain indicated that its diluted headline earnings per share for the half year ended August would come in between 95.43 and 100.88 cents per share, compared with a restated 54.53 cents per share in 2017.
Normalised headline earnings per share, which exclude the earnings impact of US$14 million spent on once-off severance payments in the prior period, are seen increasing rising up to 20% to 102.69 cents per share.
Cost saving initiatives
Pick n Pay which is 48% owned by multimillionaire businessman Raymond Ackerman and family announced it was retrenching 3500 employees, approximately 10% of its workforce in July last year.
It said this was part of voluntary severance programme which it launched in April 2017 and one of the cost saving efforts in response to difficult trading conditions in the country.
The retrenchments cut across its head office, store operations, supply chains, store operations and regional structures.
Pick n Pay flagged turnover growth at 6.4% helped by cost-cutting programme and a steady 5% increase in sales despite constrained consumer spending.
The cost-cutting included reducing its employee numbers by 10% through a voluntary severance programme that cost US$20.9 million during the 52 weeks to February 25.
Operations outside South Africa contributed US$385.01million of segmental revenue, 9.3% in constant currency terms despite of difficult trading conditions in some of the regions.
Although turnover growth was weighed down by tough trading environment in Zambia, it was offset by stronger operational efficiency and tight cost control.
Pick n’ Pay operates 1,685 stores including 57 Zimbabwean stores owned by its TM Supermarkets joint venture, having added 125 more in 2018 financial year.