October 16, 2018 / 6:34 AM / a month ago

UPDATE 1-S.Africa's Pick n Pay H1 profit jumps 19 pct as price cuts lure buyers

(Adds details, CEO comment)

JOHANNESBURG, Oct 16 (Reuters) - South African supermarket chain Pick n Pay Stores on Tuesday said half-year profit before tax jumped 19.1 percent as price cuts attracted more shoppers to its stores.

The country’s second-biggest grocery store chain reported profit before tax of 670.2 million rand ($46.70 million) for the six months ended August, compared with 562.8 million rand same period last year on a normalised basis.

South African shoppers are feeling the impact of low growth in disposable income, little to no job creation and tight credit conditions.

To keep attracting struggling consumers, Pick n Pay reduced prices across 2,500 every day grocery lines.

“We have invested heavily in our customers, just when they need it most,” Chief Executive Richard Brasher said in a statement.

“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.”

Like-for-like sales climbed 3.8 percent, more than double the previous half-year’s growth. Total sales rose to 41.2 billion rand, up 6.4 percent.

A voluntary redundancy programme to cut costs and create a leaner group also helped its performance.

Normalised headline earnings per share climbed 17 percent to 100.18 cents, the retailer said.

It declared an interim dividend of 39.10 cents per share, up 17.1 percent. ($1 = 14.3500 rand) (Reporting by Nqobile Dludla, Editing by Sherry Jacob-Phillips and Louise Heavens)

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