Pick n Pay plans to expand into Nigeria
Pick n Pay Stores Ltd. announced plans to enter Nigeria as it posted a 26% increase in full-year profit after opening 175 new stores.
The company, based in Cape Town, said it agreed to partner with Lagos-based AG Leventis & Co. to enter Africa’s largest economy.
“A key part of the group’s strategy is to establish a second engine of growth in markets in the rest of Africa,” the company said in a statement on Tuesday. Pick n Pay will hold 51% of the operation in Nigeria, “which will roll out a combination of large and smaller formats to meet consumer needs.”
South African retailers are facing headwinds including weak domestic consumer confidence, rising interest rates and a weak rand, which has declined 16% against the dollar over the past 12 months. The central bank forecasts economic growth for South Africa this year of 0.8%, which would be the slowest pace since a 2009 recession.
Earnings per share excluding one-time items rose to 2.24 rand in the year through February, Pick n Pay said. The median estimate of seven analyst estimates compiled by Bloomberg was for adjusted earnings per share of 2.18 rand.
The company restricted selling-price inflation to 3.1% over the year amid “an increasingly challenging economic environment” facing South African consumers, it said. Sales advanced 8.2% to 72.4 billion rand ($5 billion) and the trading-profit margin improved to 2.1%, from 1.9% in 2015.