Net income declined to 182 million rand ($21 million) in the six months through August, the Cape Town-based company said in a stock-exchange statement. Earnings (PIK), excluding one-time items, plunged 13 percent to 36 cents, while sales rose 5.9 percent to 28.3 billion rand.
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. The trading environment will “remain tough in the foreseeable future” and performance will be “under pressure,” Pick n Pay said today.
The retailer hired Richard Brasher, the former head of Tesco Plc’s U.K. unit, from Feb. 1 as chief executive officer to help revive growth at the supermarket chain.
“Pick n Pay has been losing market share for several years now driven, very simplistically in our view, by a lack of reinvestment in its own business given an untoward focus on paying out dividends,” Jeanine Womersley, an analyst at Renaissance Capital, said in e-mailed comments before the results were released.
Pick n Pay’s shares dropped 0.7 percent to 42.75 rand by 9:56 a.m. 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.
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