Pick n Pay's massive price cuts boost profits

CAPE TOWN – Retailer Pick n Pay said on Tuesday that half-year profits before tax grew by 19.1 percent, as it released its interim results.

The company attributes the gains to price cuts that attracted more shoppers to its stores.

Pic n Pay is the second-biggest grocery store chain in South Africa and reported a profit of R670.2 million before tax

This amount is for the six months ended August, compared with R562.8 million for the same period last year.

The retailer said that its headline earnings per share grew by 80.5 percent, with diluted HEPS up 80.4 percent.

Normalised headline earnings per share and normalised diluted headline earnings per share, removing the impact of voluntary severance costs in the prior year, are up 17.0 percent year-on-year.

Pick n Pay said its turnover grew by 6.4 percent, and 3.8 percent like-for-like.

"In an increasingly tough economy, the company delivered turnover growth of 6.7 percent in South Africa, and 4.2 percent like-for-like", the company said.

Pick n Pay said it benefited from decisive action taken last year to reduce operating costs, it increased its productivity, and invested more in the customer.

The company also held inflation at 0.3 percent against CPI Food of 3.5 percent and reduced prices across 2 500 everyday grocery lines.

Chief executive, Richard Brasher said, “I am delighted with the six-month result. This has taken a great deal of hard work from everyone in the Pick n Pay and Boxer team."

“We’ve acted boldly and taken tough decisions. We’re leaner, fitter and buying better. We’ve improved our cash flow and reduced our long-term gearing to almost zero, both indicators of a strong performance in a tough economy."

“We have invested heavily in our customers, just when they need it most. We’ve reduced prices of key grocery lines, delivered a more compelling fresh meat and produce offer, and given our customers simpler and more personalised promotions.