Pick n Pay’s half year profits grow 19.8% as turnaround plan pays off

SOUTH AFRICA – South African retail chain, Pick n Pay has posted double-digits profit growth from 18.8% to 19.8% gross profit margin in the six months to end September following its turnaround strategy.

Group trading profit increased 12.5% to R1.2bn (US$81m), while headline earnings per share rose 17.5% to 91.28%.

The retailer managed to restrict internal selling price inflation to 2.2% during the period, which lead to its rise in the direct cost of the goods it sells.

Pick n Pay, have expanded their fresh foods offering in recent years, even as it consolidates its supply base, saying this was paying off particularly in SA reports Business Day.

“In this environment, retailers have found it difficult to balance their two key objectives: delivering solid sales growth while maintaining profit margins,’’ stated Brasher, the group CEO

 “I am very pleased that we have succeeded in growing both our sales and our profits.” He added.

The company became more efficient by simplifying its product range and cutting waste, which enabled it to support customers during difficult economic conditions.

Trading profit from its SA segment increased 16.4% year on year, with the company upping its interim dividend 9.5% to 42.80c a share.

Pick n Pay has about 1,858 stores, including Boxer stores and TM Supermarkets in Zimbabwe.

Hyperinflation in Zimbabwe and tough consumer conditions in Zambia weighed on the group’s results, with its rest-of-Africa division’s contribution to group profit before tax falling 79.8% to R27.5m (US$1.8m).

Group income from value-added services, such as ticket sales and banking transactions, also boosted its performance, with income rising 16.1% year on year.

 During the period Pick n Pay launched a portfolio of insurance products in partnership with insurer Hollard, having rolled this out at 25 stores.

It has seen encouraging results to date, and would expand this offering to more stores over the next 18 months.

The supermarket chain store, recently opened the refurbished-On Nicol store, in Johannesburg, strengthening its Next Generation store concept aiming to attract more affluent consumers as retailers fight for market share intensifies.

The refurbished store has an exciting array of new offerings featuring freshly squeezed juice bar, a chocolatier, a dedicated coffee station with a signature Organic Coffee blend, a wine cellar and a Wellness Zone.

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