(Updates with company comment from third paragraph.)
Oct. 19 (Bloomberg) -- Pick n Pay Stores Ltd., South Africa’s second-largest grocer, said first-half profit fell 46 percent because of the cost of introducing a customer-loyalty program and developing a central distribution system.
Net income in the six months through August slumped to 191 million rand ($24 million), or 40 cents a share, from 354.3 million rand, or 75 cents, a year earlier, the Cape Town-based company said in a stock-exchange statement today. Sales increased 7.4 percent to 27.1 billion rand.
Pick n Pay opened the first of a network of logistics centers last year, and started the “smart shopper” loyalty program, which offers product discounts to members, in March. The retailer said Oct. 4 that spending on the projects would cut earnings by as much as half. Sales have been held back as South Africa’s economic growth slowed to an annual 1.3 percent in the second quarter from 4.5 percent the quarter before.
“We have seen encouraging turnover growth,” Chief Executive Officer Nick Badminton said. “However, the investments we have made in transforming Pick n Pay into a world class retailer have had a material impact on earnings.”
--Editors: James Kraus, Chris Peterson
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