Pick n Pay Mulls African Growth as Share of Home Market Shrinks

Pick n Pay Stores Ltd., South Africa’s second-largest grocer, is investigating opportunities to expand in other African countries as profit and market share decline at home.

The Cape Town-based retailer may move into Nigeria, Angola and Ghana after opening stores in Zambia, Mozambique and Mauritius in its last fiscal year, Deputy Chief Executive Richard van Rensburg said in a phone interview today.

“The time frame depends on opportunities,” Van Rensburg said. “Over the next 12 months we want to consolidate in the countries where we already have a presence, but we’re constantly talking to developers and looking at retail space.”

Pick n Pay has lost market share to competitors such as Shoprite Holdings Ltd. (SHP), South Africa’s largest retailer that posted a 20 percent jump in annual profit for the 12 months through June, and Massmart Holdings Ltd. (MSM), controlled by Wal-Mart Stores Inc. (WMT) The trading environment in South Africa will “remain tough in the foreseeable future” and performance will be “under pressure,” the company said in a stock exchange statement today.

Revenue rose 47 percent in the six months through August in stores outside South Africa, Van Rensburg said. That compared to a 5.9 percent rise in total sales.

Net income declined 6.3 percent to 182 million rand ($21 million) in the same period. Earnings (PIK) per share, excluding one- time items, plunged 13 percent to 35.91 cents.

The retailer hired Richard Brasher, the former head of Tesco Plc (TSCO)’s U.K. unit, from Feb. 1 as chief executive officer to help revive growth at the supermarket chain.

Pick n Pay’s shares gained less than 0.1 percent to 43.06 rand by the close of the stock market in Johannesburg.

The company said on Oct. 5 that first-half sales growth had been lower than expected and earnings had declined, citing a competitive market, poor availability of merchandise and economic pressure on customers.

To contact the reporter on this story: Jaco Visser in Johannesburg at avisser3@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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