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S.Africa’s Pick n Pay weathers unrest to pump up first-half profit

* Comparable headline earnings up nearly 91%

* Earnings supported by strong first quarter

* Targets $207 mln in additional cost savings

* Building new Boxer distribution centre (Adds CEO comments)

By Nqobile Dludla

JOHANNESBURG, Oct 20 (Reuters) – South Africa’s Pick n Pay reported an almost 91% jump in half-year earnings and has identified 3 billion rand ($207.5 million) in additional cost savings till 2025 as part of its turnaround strategy, the grocery retailer said on Wednesday.

The company said its results reflected solid performances by its value Boxer grocery chain and clothing businesses, strong momentum in its online business, effective management of working capital and capital investment and easing of pandemic curbs.

Comparable headline earnings per share (HEPS) rose to 70.85 cents in the 26 weeks to Aug. 29 from a low base of 37.12 cents a year earlier caused by COVID-19 restrictions. Comparable HEPS exclude hyperinflation accounting in Zimbabwe.

Pick n Pay declared an interim dividend of 35.80 cents per share, up 91%.

The retailer’s second-quarter performance was hit by civil unrest in South Africa where people looted and damaged stores. The resumption of government restrictions on alcohol sales in response to the third wave of the pandemic also impacted sales.

The group, with 2,039 stores across Southern Africa and Nigeria, estimated that the disruptions resulted in a roughly 1.7 billion rand ($117.31 million) hit to sales in that quarter.

Chief Executive Officer Pieter Boone told investors the additional cost savings would be made, among other things, through supply chain efficiencies and continued restructuring of support offices.

In a bid to increase its market share in the lucrative less-affluent segment, the retailer’s Boxer chain will add another distribution centre.

In its Pick n Pay select stores it is adding new product lines focusing on fresh produce, plant-based meals and convenience products to better compete with Shoprite’s Checkers chain in the upper market.

This will be rolled out to a further 16 stores, it said.

($1 = 14.4600 rand) (Reporting by Nqobile Dludla; Editing by Promit Mukherjee, Subhranshu Sahu and Pravin Char)

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