Pick n Pay, South Africa’s second-biggest grocery retailer, reported a 40 percent decline in first-half profit on Wednesday, hit by the start-up costs for its newly launched shopper reward programme and investments in its distribution system.
Pick n Pay said on Wednesday headline earnings per share totalled 54.7 cents in the six months to end-August, compared with 90.17 cents a year earlier.
An interim dividend of 22.50 cents per share was declared from 37.00 cents a year ago.
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The company warned earlier this month that profit could fall as much as 45 percent.
While consumers gradually warm up to spending in Africa’s biggest economy thanks to lower interest rates, Pick n Pay has yet to see the benefits, as it is spending a chunk of its cash to improve its supply chain and protect market share as competition intensifies.
Pick n Pay said sales increased 7.4 percent to R27,1bn ($3.4bn).
"We aimed to sign up 3-million (Smart Shopper loyalty programme) cardholders in the first year and achieved 4.1-million in the first six months. Although still in its infancy, we believe the encouraging growth in turnover is due in part to this programme," it said.
"Looking ahead, we will be simplifying our regional and store structures and our administration functions," the company said.