South Africa's Pick n Pay's full-year earnings up 35%-45%, revenue up 7.7% after company reduced costs via job cuts, revamping of supply chain; South African retailers have been hurt by high joblessness, interest rates

Cindy Allen

JOHANNESBURG, South Africa , April 7, 2014 (Bloomberg LP) – Pick n Pay Stores Ltd., South Africa’s second-biggest grocer, said full-year earnings gained as much as 45 percent after the company reduced costs through job cuts and and the revamping of its supply chain.

Adjusted earnings per share on a pro forma basis increased 35 to 45 percent in the 12 months ended March 2, while revenue advanced 7.7 percent, the Cape Town-based company said in a statement. Sales growth in the previous fiscal year was 7.1 percent.

“Much work remains to be done in what is a difficult trading environment,” said the company, which hired former Tesco Plc director Richard Brasher as chief executive officer last year. “Our strategic focus remains that of customer-driven and sales-led growth, with progress on efficiency and expense control.”

South African retailers have been struggling as high unemployment and a rise in interest rates has hurt disposable incomes. Shoprite Holdings Ltd., Africa’s largest grocer, said in February cost-of-living increases were hitting customers hard in the continent’s biggest economy.

Pick n Pay shares reversed losses of 2.4 percent, trading 0.6 percent higher at 51.25 rand at the close in Johannesburg. The stock has declined 1.4 percent this year, compared with a 4.5 percent increase on the FTSE/JSE Africa All Shares Index.

To contact the reporter on this story: Kamlesh Bhuckory in Johannesburg at kbhuckory@bloomberg.net To contact the editors responsible for this story: Simon Thiel at sthiel1@bloomberg.net John Bowker, Robert Valpuesta

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