South African supermarket operator Pick n Pay on Tuesday reported a 25 percent fall in half-year earnings as a weak economy and staff cuts weighed on profit.
Headline earnings per share fell to 61.88 cents for the six months to August 31 from 82.43 cents a year earlier.
Headline earnings per share strip out certain one-off items and are the main profit measure in South Africa.
Pick n Pay reduced staff this year with a voluntary severance programme to cut costs as economic growth stalled in its home market.
“We’ve taken about 10 percent of workforce out and obviously we have to pay that bill in the first half, which is what we are doing,” Chief Executive Richard Brasher told Reuters.
Excluding severance costs, earnings rose by around 13 percent, marking a ninth consecutive period of profit and sales growth, the company said in a statement.
Sales rose by 5.1 percent to 39.3 billion rand as South Africa’s first recession in 8 years constrained consumer spending and retailers lured shoppers by cutting prices.
When Brasher took the reins at the retailer in 2012, growth at rivals Shoprite and Woolworths had outpaced Pick n Pay for more than a decade.
Pick n Pay has since pushed into private label products, increasing the share of these higher-margin products to 19 percent of sales, from 5 percent, Brasher said.
(Reporting by TJ Strydom; editing by Jason Neely)