Still struggling Impressive HEPS
The retailer announced HEPS will be down by more than 20% largely due to the costs associated with retrenching 3 500 staff during the period. This is part of the continued attempt to get the business to better levels of profitability combined with central distribution, product price cuts and its loyalty programme. However, all the evidence since the new CEO, Richard Brasher, started in February 2013 shows that Pick n Pay remains a very hard business to turn around in terms of improved profit margins. I continue to prefer Shoprite**, which has better margins and exposure to the rest of the continent. ADvTECH issued a trading update and it is expecting HEPS to be 4% to 7% higher, but if you remove some oddities from the last set of results (settlement from a legal matter and one-off costs associated with the Maravest acquisition and the rights issue) you get HEPS of 20% to 25%. I have been doing my research on this stock and am likely to be adding it to my long-term investment portfolio, but I am waiting for the results due on 21 August. ■ *finweek is a publication of Media24, a subsidiary of Naspers. **The writer owns shares in Shoprite.