Pick n Pay shares drop after warning retrenchment costs will eat into earnings
Retailer Pick n Pay’s share price fell more than 1% on Monday afternoon, after it warned shareholders that retrenchment costs would drag down its interim headline earnings per share (HEPS) by a slightly bigger margin than previously estimated.
The grocery chain said in a trading statement that HEPS for the 26 weeks to August 27 would be at least 19c, or 20%, lower than the 82.43c reported in the matching period, a difference of 2c from its July estimate.
In April‚ Pick n Pay launched a voluntary severance programme, offering employees one-and-a-half weeks of pay for each completed year of service‚ plus four weeks of notice pay.
Without the retrenchment process, HEPS was expected to increase by between 10% and 15%, to 90.67c and 94.79c, with the company expecting the cost of the programme to be fully recovered by the end of the financial year.
CEO Richard Brasher said: "On a normalised basis, excluding the voluntary severance process, we again delivered a double-digit improvement in profitability."
During the period, turnover grew 5.1% with the company restricting selling price inflation to 3.6%, Pick n Pay said.
At 2.35pm Pick n Pay’s share price was down 1.44% to R56.78. Its first-half results are expected on October 17.