Pick 'n Pay profit flat, outlook tough

| Thursday April 22, 2010 00:00

Shares of the company fell nearly 2 percent after the results  yesterday, becoming the biggest percentage loser on Johannesburg's Top-40 index. South Africa last year exited its first recession in nearly two decades, but household finances remain under pressure and retail sales have been worse than economists expected.

Pick 'n Pay rival Shoprite said in February it saw little likely improvement in market conditions this year as consumers battle job losses and high levels of debt.

In a bid to offset slack demand at home, Pick 'n Pay said it was planning to open its first store in Zambia this year, and had identified sites for expansion into Mauritius.

'Sadly, it looks like all the fears we had have come true,' said a Johannesburg-based analyst who declined to be identified.

'They continue to lose market share and given the cost structure of the company, I think there's some serious work that needs to be done.' South Africa's second-largest supermarket chain said it expected business to remain difficult into the March-August period.

Headline earnings per share, the main profit gauge in South Africa, rose just 1 percent in the year to end-February, totalling 236.33 cents. Headline EPS strip out some one-off and non-trading items.

Revenue totalled 55 billion rand, an increase of just under 8 percent from the previous year.

Shares of the company were down 1.8 percent at 43.89 rand as of 0802 GMT, underperforming the Top-40 index, which was little changed. Over the last 12 months, Pick 'n Pay's shares have gained more than 50 percent, outperforming a 46 percent rise in the Top-40 index.-(Reuters)