Pick n Pay reports strong half year growth – cautions over load shedding costs
Pick n Pay reported strong growth in its first trading period under the Ekuseni strategic plan, with a turnover of R51.3 billion for the 26 weeks that ended 28 August 2022.
This strong turnover growth, in part, reflects the normalisation of the environment after the July 2021 civil unrest and Covid-19 liquor trading restrictions last year, which negatively impacted
the base, it said.
“When excluding these disruptions in the base, we estimate normalised H1 FY23 turnover rose by an encouraging 8.2%, it said.
However, Pick n Pay said it continued to feel the after-effects of the civil unrest in terms of increased insurance and related security costs. Additional expense increases arose from broad inflationary pressures and from investment in implementing our Ekuseni strategic plan, it said.
Despite this, the group reported pro forma profit before tax of R588 million, up 22.2% year-on-year.
Headline earnings per share were up 25%, while the retailer delivered an interim dividend per share of 44.85 cents per share, also up 25%.
In May, the group launched its Ekuseni strategic plan, splitting Pick n Pay supermarkets into two tailored banners: QualiSave, serving lower-to-middle-income customers, and Pick n Pay, serving middle-to-upper-income customers.
It also launched an accelerated store refurbishment programme to clearly differentiate the two banners. The refurbished stores achieved average weekly sales growth of 15% year-on-year since launch, the group said.
A total of 41 Pick n Pay and Pick n Pay QualiSave stores were refurbished to the new CVPs by the end of August. The Group is targeting 130 full CVP upgrades by February 2023.
Pick n Pay Clothing continued to gain market share with 14.8% sales growth, while online sales growth was up 82%, with future growth to be supported by the recent launch of Pick n Pay groceries on the Mr D app.
Boxer reported H1 FY23 sales of R15.2 billion, up 26.9% year-on-year. Excluding its nine eSwatini stores, Boxer reported South Africa sales of R15 billion (accounting for 30.2% of the group’s South Africa sales). Boxer South Africa’s year-on-year sales growth was 27.2%.
Pick n Pay said that the combined impact of increased load shedding and sharp fuel price increases has been felt particularly hard. The group said it spent R110 million more on energy costs in H1 FY23 than the comparable period, reflecting extra spend on diesel net of electricity cost savings.
This includes both increased trucking costs and increased store-level generator costs. “Given that load shedding accelerated in the latter part of the period, the H2 impact is likely to be more severe,” it warned.
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