Customers shop at Pick n Pay in Carlton Centre, Johannesburg. File picture: Leon Nicholas

Johannesburg - Pick n Pay Stores, which is in the midst of being freed from its pyramid shareholding structure, has delivered its 7th consecutive period of headline growth of more than 20 percent as it opens more shops.

In a statement to shareholders released on Tuesday, the listed retailer says turnover gained 7.2 percent to R37.4 billion in the first half to August. Earnings per share leapt 18.5 percent to 78.69c, while headline earnings per share - a key measure of profitability - came in 23.7 percent higher, at 82.43c.

However, Pick n Pay says the headline figure excludes capital losses, which accounts for the difference in the year-on-year increase between earnings and headline earnings per share.

Stripping out the addition of new stores, revenue gained 3.5 percent.

During the period, It opened 74 new stores, 38 of which it owns, while the balance is franchised. Of these, 9 are Pick n Pay local stores, 23 are Express outlets, 8 are clothing stores and 17 are liquour offerings. It adds 7 new supermarkets were opened outside South Africa: 3 in Namibia, 3 in Zambia and 1 in Zimbabwe. Its Zambian unit was a let down, but it remains committed to the country, it adds.

Pick n pay also refurbished 35 stores, including 19 Pick n Pay and Boxer Supermarkets, and 6 local stores. “This is almost triple the number of stores refurbished in the prior period.”

Read also: PnP soars as it streamlines ownership

Its share of the profits of TM Supermarkets (its associate in Zimbabwe) grew by 53.7 percent in local currency terms. TM Supermarkets now has 58 stores in Zimbabwe, 15 of which trade under the Pick n Pay banner.

It adds it is on track with developing its operations in Ghana and Nigeria, with both businesses in an early start-up phase. The first store in Ghana will open towards the end of the 2017 calendar year, with our first store in Nigeria likely to open in 2018.

New stores contributed 3.7 percent to turnover growth and added 2.1 percent to total trading space.

The group says its growth in profitability came despite a “challenging trading environment - characterised by sluggish economic growth, depressed consumer confidence and heightened competition”. It boosted its trading profit margin to 1.5 percent of turnover, from 1.3 percent, it notes.

During the first half, Pick n Pay focussed on financial controls and tight management of costs. Despite inflation persisting around the upper level of the South African Reserve Bank’s target, Pick n Pay kept its growth in like-for-like trading expenses at 3.8 percent.

Inflation for the period was 6.1 percent.

Pick n Pay adds greater levels of capital investment and inventory as a result of new stores, refurbishments and centralisation, resulted in lower cash balances at the end of the period. “This investment, together with the repayment of long-term structured debt of R400 million and the positive effect of the calendar cut-off on accounts payable in the prior period, resulted in lower cash flows over the period.”

Its capital expenditure will be focussed on expansion and refurbishment to improve the customers’ shopping experience.

It declared a 29.9c a share dividend, up on last year’s 24.2c a share.