Load shedding wipes another R300 million from Pick n Pay

 ·19 Jul 2023

Pick n Pay says heightened load shedding has had a severe impact on its costs in the first 20 weeks of its 2024 financial year.

In a trading statement for the period covering 27 February 2023 to 16 July 2023, the group’s sales jumped by 4.8%, whilst South African sales growth for the period was 4.4% (0.9% like-for-like).

The rest of the African segment saw strong growth of 15.9% (12.0% on a constant currency basis)

Clothing sales in stand-alone stores jumped 10.9%, whilst liquor sales grew 9.8%.

Online sales growth for the period was 75.3%, showing the group’s continued strong online sales growth momentum that was reported in FY23.

However, it said that South African sales for the period were constrained by the slow performance from Pick n Pay, despite Boxer sales acceleration moderately from the 14.4% reported for H2 FY23.

Pick n Pay’s South African sales dropped by 0.3% (0.0% like for like).

The group said that the slower sales momentum relative to the 3.2% reported for H2 FY23 was due to a reduction in promotional activity during the period as the group tried to manage the cost pressures caused by load shedding.

The total diesel cost to run generators for the 4-month period of March to June was R300 million.

In FY23, the group spent an incremental R522 million on diesel to run generators.

The estimated net incremental energy costs were approximately R165 million, potentially annualising to R250 million in H1 FY24.

The group said that sales momentum recovered towards the end of the reporting period, with the reduction in load shedding in June and early July allowing the group to intensify its promotional programme.

Pick n Pay’s sales growth for the last three weeks of the reporting period totalled 2.4% (2.9% like-for-like).

It added that Pick n Pay Qualisave and the stores that have undergone customer value propositions (CVP) upgrades are outperforming the rest of the estate.

Boxer South Africa sales grew by 15.4% (3.0% like-for-like), despite the high base of 27.2% sales growth recorded for H1 FY23.

The group padded that its internal selling price inflation was 9.5%, below Stata SA Food CPI of 13.2% for the period.

Overall sales for the reporting period are:

Pick n Pay sales-0.3%
Boxer SA sales15.4%
SA Total Sales 4.4%
Rest of Africa sales15.9%
Group turnover 4.8%

Financials

The group said that it expects its earnings per share, headline earnings per share and pro format headline earnings per share for H1 FY24 to decrease by more than 20% when compared to H1 FY23.

The group said that it anticipated H1 FY24 to be under pressure due to H1 and H2 earnings seasonality, the base (H1 FY23) being less impacted by load shedding, the roughly R110 million duplication of supply chain costs during the handover from the Londmeadow to Eastport distribution centres and approximately R250 million in restricting costs.


Read: R2.4 billion bill for South Africa’s biggest retailers




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