Pick n Pay rallies on results

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Pick n Pay rallies on results

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Published Date: 2019-10-23 | Source: Stephen Gunnion | Author: Stephen Gunnion

Pick n Pay rallies on results

The retailer has lifted its interim dividend by 9.5 percent after a strong first half, sending its shares as much as 13 percent higher.

Pick n Pay has rung up a strong first-half performance as sales growth at its SA operations offset the impact of foreign exchange volatility in Zimbabwe and tough conditions in Zambia. The supermarket group claims a 6.5% increase in sales at its Pick n Pay and Boxer stores beat the overall growth in the market.

The retailer said its focus on costs and efficiency over the past number of years years had provided headroom to keep selling prices in check. It raised prices by an average 2.2% over the period, helping it attract more customers despite the weak economy.

Turnover grew by 6% in the 26 weeks to 1 September, with like-for-like growth of 2.9%. In Zambia, trading conditions remained constrained, with muted sales growth and the weaker kwacha weighing on overall growth. Zimbabwe also experiencing significant currency devaluation and hyperinflation over the period. Due to the way it accounts for its minority stake in TM Supermarkets, it recorded a hyperinflation net monetary gain over the period, and a related capital impairment.

CEO Richard Brasher said in the current environment, retailers were finding it difficult to balance their two key objectives of delivering solid sales growth while maintaining profit margins.

Group revenue increased by 4.8% to R44.2 billion and trading profit jumped 12.5% to R1.19 billion as its trading profit margin improved to 2.7%. Earnings per share increased by 0.9% to 81.31c due to capital losses during the period, including its share of the hyperinflation loss in Zimbabwe. Comparable headline earnings per share increased by 9.5% to 85.03c. These exclude the net monetary gain from the effect of hyperinflation. It's increased its interim divined by 9.5% to 42.8c per share.

Its shares rose as much as 13% yesterday, before closing 11% higher at R67.98.





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