Pick n Pay has published its financial results for the six months ending 26 August 2018.
Despite a tough economy, the company said that it had its strongest six-month trading performance – measured by volume – in more than five years.
Headline earnings per share grew 80.5% to 100.18 cents per share, with diluted HEPS up 80.4% to 98.38 cents per share.
On a normalised basis, headline earnings per share and normalised diluted headline earnings per share were up 17.0% year-on-year.
Total turnover reached R41.2 billion (up 6.4%) from R38.8 billion during the same period last year, while trading profit was at R631.8 million – up 58.3% from R399.1 million the previous year.
Gross profit margin was maintained at 18.6%, with internal inflation held at 0.3% against CPI food of 3.5%.
Profit before tax was R670.2 million, with profit after tax at R489 million (up from R263.2 million).
The group declared an interim dividend of 39.10 cents per share.
The company said that it benefited from decisive action taken last year to reduce operating costs, increase productivity, and invest more in the customer.
“We’ve acted boldly and taken tough decisions. We’re leaner, fitter and buying better,” said CEO Richard Brasher “We’ve improved our cash flow and reduced our long-term gearing to almost zero, both indicators of a strong performance in a tough economy.
Brasher added that a tough economy is a good test for a solid retailer.
“Pick n Pay has improved its offer, localised our product offerings and found traction with customers across all sections of the economy. This has been achieved without any sacrifice in earnings or profit margin.”
Pick n Pay Store account
The retailer also noted that its Pick n Pay Store account now has 100,000 active customers.
Launched in September last year, the service enables customers to pay for their goods at a later date on a card with no joining fees and low-interest rates.
Pick n Pay reported in April that it had already granted R1 billion total credit, with 57,000 56,000 store account holders approved.
The account is accessed through the customer’s Smart Shopper card, with the credit provider carrying all associated funding costs and credit risk. Since the launch in September, 56,000 store account holders have been approved and just over R1 billion total credit has been granted,” Pick n Pay said in an April statement.
“It offers the most affordable form of credit in the market, with a 55 days free credit payment option, no joining fee, no hidden administration fees and the lowest monthly fee in the market,” the retailer said.
Pick n Pay said that customer feedback confirmed that customers are switching to the Pick n Pay card from other more expensive forms of credit, and many of its customers avoid all interest charges by paying off their accounts in full each month.