Pick n Pay plans Nigeria entry as profit rises amid sales growth

Pick n Pay Stores Ltd. announced plans to enter Nigeria as it posted a 26 percent 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 percent 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 percent against the dollar over the past 12 months. The central bank forecasts economic growth for South Africa this year of 0.8 percent, 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 percent over the year amid “an increasingly challenging economic environment” facing South African consumers, it said. Sales advanced 8.2 percent to 72.4 billion rand ($5 billion) and the trading-profit margin improved to 2.1 percent, from 1.9 percent in 2015.