Pick n Pay Stores Ltd eliminated thousands of positions as South Africa’s second-biggest supermarket chain further reduces costs to help combat weakening consumer confidence and increasing competition.
The retailer removed about 10 percent of its roles and functions in South Africa, including vacant roles that weren’t filled, according to a statement on Monday. The cuts were made through a voluntary-severance programme. Costs related to the cuts mean first-half earnings will fall more than 20 percent, Pick n Pay said.
Like most South African retailers, the company is looking for ways to help offset sluggish trading amid falling consumer confidence and mass unemployment. Competition also remains tough, with larger rival Shoprite Holdings Ltd. expanding its higher-end Checkers chain of stores.
“Pick n Pay has been focusing on this restructuring and I expect this has made it harder to push ahead on improving sales,” said Alec Abraham, an analyst at Johannesburg-based Sasfin Securities Ltd.
The shares rose 0.3 percent at 10:45 a.m. in Johannesburg, reversing a drop of as much as 3.8 percent after the news was announced.
Pick n Pay employs more than 80 000 people across Africa in its owned and franchise business. The company declined to say how many employees were affected, or the number of workers from which the 10 percent was calculated. The cuts were across most areas of the business from stores to head office, though the company wouldn’t be more specific.
The severance programme started in April and is now complete. The full cost will be taken in the six months through August, with earnings per share expected to fall at least 16 cents from 78.69 cents a year earlier, the company said. BLOOMBERG