In a bad place

Finweek English Edition - - MARKETPLACE -

The Pick n Pay results show its trad­ing profit mar­gin in­creas­ing to 2.3% ver­sus 2.1% in the pre­vi­ous year. This is on the back of sales up by a very mod­est 7% and di­luted HEPS up by 17.2%. How­ever, the like-for-like sales fig­ure was up only 3.4% while the com­pany’s in­fla­tion was 6.1%, mak­ing for a neg­a­tive 2.7% growth. Seem­ingly the re­tailer is still los­ing mar­ket share, and I won­der if changes to the Smart Shop­per dis­count pro­gramme will cause this trend to con­tinue. The share price is off by more than 25% since the high of 8 424c in Au­gust 2016, and for the first time in years the stock is only mod­estly ex­pen­sive on a for­ward price-to-earn­ings ra­tio (P/E) of around 21. Sho­prite*, on a for­ward P/E of some 19.5, boast­ing bet­ter mar­gins and solid ex­po­sure in the rest of Africa, re­mains my pre­ferred pick in the low-LSM food re­tail space.

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