Pick n Pay’s share price slumped 2.5% in early trade on Thursday. The weakness was probably not a delayed response to interim results released earlier in the week as all the retailers were under price pressure. The drop reversed a short-term stronger trend and pushed against the generally favourable response to the group’s interim results. Although the top line was disappointing, analysts seem encouraged by evidence that the management is continuing to strengthen the trading margin. It remains significantly below Shoprite’s level, which looks impossible for competitors to replicate, but is comfortably ahead of the wafer-thin levels recorded in 2013. Particularly important is evidence of progress on two key fronts: centralisation of distribution and labour costs. Pick n Pay has struggled for years to deal with the challenges of centralised distribution but now seems to be getting it right. CEO Richard Brasher says the retailer can lift the percentage of groceries distributed centrall...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.