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Business & Technology
Apr 23 2013 8:06AM
 
Pick n Pay profit down 31% as costs bite
South Africa's No.2 grocer, Pick n Pay, reported a largely expected 31 percent in full-year profit on Tuesday, reflecting a costly strategy to win market share and improve its supply chain. Picture: Gallo Images
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South Africa's No.2 grocer, Pick n Pay, reported a largely expected 31 percent drop in full-year profit on Tuesday, reflecting a costly strategy to win market share and improve its supply chain.

Diluted headline earnings per share totalled 109.6 cents in the year to end-February from 157 cents. That was a touch below the 111 cents forecast by Thomson Reuters StarMine, which gives more weight to estimates from historically accurate analysts.

Headline EPS, the primary measure of profit in South Africa, strips out certain one-time items.

Pick n Pay is trailing behind rivals such as Shoprite and Spar both operationally and in the stock market due to late investments in the supply chain and the costs from a shopper loyalty programme to protect market share.

CEO Richard Brasher, the former head of Tesco's UK unit who took over Pick n Pay this year, is widely expected to hasten the business turnaround and help it fend off competition from Wal-Mart unit Massmart.

Pick n Pay said sales increased 7.1 percent to 59.3 billion rand ($6.4 billion), beating a 5.6 percent growth rate in a Thomson Reuters poll of 10 analysts.

However, the family-controlled business slashed its annual dividend by a higher-than-expected 35.8 percent to 84 cents per share as its trading margin deteriorated.

Shares of Pick n Pay have fallen 6 percent over the last 12 months, compared with a 12 percent rise in Johannesburg's All-Share index. - Reuters

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