South African supermarket group Pick ‘n’ Pay today (21 April) posted flat full-year earnings and warned that it expects difficult trading conditions to continue in the next six months.
Pick ‘n’ Pay reported that headline earnings per share – which strip out one-off and non-trading items – increased by just 1.1% in the year to 28 February. Headline EPS rose to 236.33 cents, the group revealed in a regulatory filing this morning.
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However, sales rose by 9.8% to ZAR55bn (US$7.4bn) as the company was able to gain market share.
CEO Nick Badminton said the past financial year had been an “exceptionally tough” trading period with the recessionary climate biting especially hard during the second half.
“While it was tempting to use a deflationary food environment to attempt margin recovery, we continued to keep prices for consumers as low as possible. We believe this will pay loyalty dividends to us down the line,” he said.
The company revealed that trading profit margin dropped to 3% as gross profit margin fell from 19% last year to 18.6% this year.
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By GlobalData“The drop in trading profit margin clearly demonstrates our continued investment in prices on basic foods. However, the overall decrease was counteracted by enhanced operational efficiencies, especially in our supply chain,” Badminton said.
Pick ‘n’ Pay revealed that it expects trading conditions to remain tough in the March-August period as household finances remain squeezed by high debt and unemployment.
