Pick n Pay has published its interim results for the six months ended August 2020, showing a 52% drop in headline earnings per share, as group sales and earnings were inevitably negatively impacted by Covid-19 and the measures taken by governments to contain it.
Comparable HEPS of 37.12 cents, declined by 56.3% to 85.03 cents per share.
Trading restrictions affected up to 20% of the group’s revenue at different stages of the nationwide lockdown, and sales were further impacted by reduced trading hours, limits on the number of customers in stores, and temporary store closures.
These restrictions resulted in an estimated R2.8 billion in lost sales over the period.
Against this background, group turnover increased 2.6% year-on-year, with like-for-like growth of 1.0%. Turnover from South African operations increased 3.4%, with like-for-like growth of 1.7%.
Food, groceries and general merchandise (excluding liquor, clothing and tobacco) grew 8.7% year-on-year (6.4% like-for-like), with 9.9% growth in South Africa (7.6% like-for-like). Core food and grocery sales in South Africa grew 4.2% in volume, the retailer said.
Pick n Pay declared an interim dividend per share of 18.74 cents, down 56.2% from 42.80 cents before.
Group earnings were impacted by additional measures taken to protect staff and customers during the lockdown, resulting in R150 million in additional operating costs.
Gross profit increased 1.0% to R8.6 billion, with a 0.2% point reduction in the gross profit margin to 19.6% of turnover. This reflected the impact of trading restrictions on a number of higher margin categories, mitigated by efficiency savings and progress on centralisation in the group’s supply chain.
Pick n Pay pointed to strong market share gains in key clothing categories and the launch of the group’s online clothing platform over the period, while 42 new stores were opened despite lockdown disruption, taking its footprint to 1,945 stores.
Smart Shopper loyalty participation accounted for up to 70% of sales, with seven million active customers.
CEO Richard Brasher said: “Although the pandemic inevitably impacted our sales and profit, we have delivered a resilient result, with many reasons to be positive about the future.”
“Customers had a very difficult six months, with unemployment reaching record levels and many families suffering sharp falls in income. We responded by getting even tighter on our costs, investing R500 million in the price on everyday essentials, deepening our promotions and providing even better offers to Smart Shoppers.
“Our internal inflation was held below CPI Food, and our investment delivered market share gains in edibles, perishables and fresh categories.”
Looking ahead, Brasher said: “Project Future has positioned us very well for a better future, with savings over the next two years set at R1 billion. We are a more agile, innovative, productive, efficient business, approaching the future with confidence.”