SOUTH AFRICA – The retailer supermarket Pick n Pay has said that half-year profits before tax grew by 19.1% to US$47.17 million boosted by massive price cuts that attracted more shoppers into its stores, reports IOL Business report.
Headline earnings per share grew by 80.5%, excluding the impact of voluntary severance costs from last year’s staff layoffs.
The retailers announced approximately 3,500 job cuts, 10% of its workforce in July last year in response to difficult trading conditions that rocked most of the businesses during the year.
Turnover for the six months ended August rose 6.4% to US$2.90 billion while same-store sales growth, particularly in South Africa increased significantly.
It reduced prices across 2,500 everyday grocery lines while maintaining inflation at 0.3% against CPI Food of 3.5%.
Pick n Pay opened 14 new Express stores during the reporting period, bringing its footprint of garage forecourt stores in SA to 133.
Zimbabwean joint-venture TM Supermarkets delivered turnover growth of 30.4% attributed to improved stock availability and an effective promotional calendar, offsetting unsatisfactory performance in Zambia and other countries outside SA.
Zambia suffered from difficult trading conditions, that is constrained consumer, intense retail competition, import restrictions and selling price deflation though this was mitigated through determined cost control and tight working capital management.
The period saw the retailer take steps towards reducing operating costs, increase productivity and investment in the customer through discounting and lower pricing.
The company said it offered ‘Smart Shoppers’ US$169.08 million in personalized discounts.
It added new rewards to the Smart Shopper card enabling them to redeem their points at the store’s till points.
Other enhancements to the programme included the introduction of the Card-less Swipe functionality.
Commenting on the results, Chief executive, Richard Brasher said: “I am delighted with the six-month result.
We’ve improved our cash flow and reduced our long-term gearing to almost zero, both indicators of a strong performance in a tough economy.”
“We have invested heavily in our customers, just when they need it most.
We’ve reduced prices of key grocery lines, delivered a more compelling fresh meat and produce offer, and given our customers simpler and more personalised promotions.”
The CEO said the company was free from its long term debts and would fully repay them in October, giving them the opportunity to invest in attractive ventures.