Boston, MA -- (ReleaseWire) -- 01/28/2014 -- Chief among Pick n Pay's problems has been a relatively dated distribution network, which was thought to be a contributing factor in its consistently weaker operating margin performance compared with Shoprite over the past few years.
To address such shortcomings, its margins would have to get weaker before they could get better as the company invested in improving its competitiveness. In the six months to September its same-store sales rose 3.1% year-on-year (y-o-y). Trading profit increased 15.% y-o-y to ZAR317.5mn (US$32.2mn) Longer-term, Pick n Pay is aiming to bump up its operating margins nearer to the 4.5% range, compared with 2.7% last year and 2.3% this year. Getting its margins above 4% would represent a tremendous step forward in Pick n Pay's ability to remain competitive as the South African retail landscape evolves considerably over the next few years. With Walmart's Massmart unit also expected to spend significantly on food retailing, the next few years will be particularly important for Pick n Pay.
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