(Adds CEO, analyst comment, share price)
JOHANNESBURG, April 19 (Reuters) - South Africa’s Pick n Pay reported slower sales and profit growth in its full-year results on Wednesday, sending the retailer’s shares lower despite an 18 percent rise in earnings.
Retailers in Africa’s most advanced economy compete fiercely for customers whose spending power has been hit by inflation running above 6 percent and weak economic growth.
Pick n Pay said headline earnings per share (EPS), the most widely used profit measure in South Africa that excludes some one-off items, was 264.35 cents in the year to the end of February, up 18 percent on the 224.04 cents a year earlier.
But the retailer’s profit growth slowed from 26.4 percent in the previous year as consumers at all income levels had less to spend, chief executive Richard Brasher told Reuters.
The results were weaker than expected with sales volumes sliding 2.5 percent, said Sasfin Wealth analyst Alec Abraham. “They seem to have lost momentum in the second half of the year,” he said.
Inflation in South Africa was 6.1 percent in March, lower than February’s 6.3 percent but still higher than the upper end of the central bank’s target of 3-6 percent.
“What we do see is people would trade into smaller pack sizes mid-month or maybe choose a Pick n Pay no-name product where maybe otherwise they would have chosen a brand,” Brasher said.
Sales grew 7 percent, slowing from last year’s 8.2 percent, reflecting the difficult trading environment and some disruption from store refurbishments and closures, the firm said in a statement.
Shares in Pick n Pay were down 4.3 percent at 61.77 rand by 1207 GMT, compared with a 0.6 drop in the Johannesburg Securities Exchange’s general retailers index. (Reporting by TJ Strydom; Editing by Sunil Nair and Edmund Blair)