Investors didn’t appear overly impressed with the recent trading update from Pick n Pay although it was one of the most upbeat trading statements from the retail sector in months. Like-for-like volume growth of 3.5% in the six months to end-August is a sterling performance given that most of its competitors are struggling to hold on to their previous reporting period’s sales. Evidently savings on labour costs have been used to entice customers with lower prices. After an initial slight firming, following the update, the retailer’s share price eased back to around R65. At this level it’s on a price:earnings ratio of a comparatively expensive 23 times; Shoprite is on 19 times and Woolworths on 14 times. It may be that, despite indications of a much-improved performance, investors have become too jittery about the grim conditions in which Pick n Pay and its competitors are trading to push ratings much higher. Comparison with the previous financial year have been complicated by the R200...

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