Pick n Pay says it has made progress on its turnaround plan but still expects its financials to deteriorate in the current reporting period.<\/p>\n\n\n\n
In a trading update for the 21 weeks ended 21 July 2024 and a trading statement for the 26 weeks ended 25 August 2024, the group said that the period reflected another strong performance from Boxer stores.<\/p>\n\n\n\n
It added that the refreshed management team at the Pick n Pay segment has begun executing its turnaround plan. <\/p>\n\n\n\n
“Given that the majority of the Pick n Pay segment\u2019s new management team has only been in place since March 2024, the Group is encouraged by the initial progress made while acknowledging the magnitude of the multi-year journey to return this segment to profitability,” said the group. <\/p>\n\n\n\n
In the group’s financial results for the year ended 25 February 2024, the Pick n Pay segment triggered an R2.8 billion non-cash impairment on the assets of Pick n Pay company-owned stores, resulting in an overall after-tax loss of R3.2 billion. <\/p>\n\n\n\n
However, group sales for the 21 weeks ended 21 July 2024 increased by 4.5% (3.7% like-for-like): <\/p>\n\n\n\n
<\/p>\n\n\n\n
Clothing sales growth in standalone stores (reported within Pick n Pay segments) was up 10.3% (0.7% like-for-like), with like-for-like growth impacted by the late arrival of winter weather and port delays.<\/p>\n\n\n\n
Despite the challenges, Pick n Pay Clothing continued to gain market share during the period. <\/p>\n\n\n\n
Online sales growth for the period was 63.9%, sustaining the 74.4% online sales growth momentum reported for FY24. <\/p>\n\n\n\n “The key turnaround indicator the Group is targeting within the Pick n Pay SA segment is like-for-like sales growth in PnP SA Supermarkets\u2014excluding standalone clothing stores. The group is seeing steady improvement in this metric, from -0.4% in H2 FY24 to +2.0% for the Period.”<\/p>\n\n\n\n “Company-owned PnP SA Supermarkets\u2014which account for the majority of reported Pick n Pay “As a result of improved retail disciplines, like-for-like sales for this segment increased from -0.5% in H2 FY24 to 3.6% for the Period. <\/p>\n\n\n\n “The return of Pick n Pay Hypermarkets to positive sales growth after a sustained period of underperformance is particularly noteworthy.” <\/p>\n\n\n\n However, like-for-like sales momentum in SA Franchise Supermarkets dropped 0.8% across the period, <\/p>\n\n\n\n Company-owned stores have rarely outperformed Franchises in recent years. <\/p>\n\n\n\n “While the group views this trend reversal as further confirmation of early progress in the turnaround of company-owned supermarkets, revitalising the performance of the franchise stores is a key current priority.” <\/p>\n\n\n\n Financials <\/strong><\/p>\n\n\n\n For the 26 weeks ended 25 August 2024 (H1 FY25), the group expects earnings per share (EPS), headline earnings per share (HEPS), and comparable HEPS to decrease by over 20% from H1 FY24. <\/p>\n\n\n\n “This outcome is broadly in line with the expectation communicated by CEO Sean Summers at the FY24 results presentation in May 2024, in which he noted that the situation may well get worse before it improves<\/strong>.” <\/p>\n\n\n\n The earnings guidance also excludes the impact of hyperinflation accounting for the group’s Zimbabwean associate, TM Supermarkets.<\/p>\n\n\n\n Although the Boxer segment trading profit is expected to show positive year-on-year growth, the Pick n Pay’s segment trading profit is expected to decline. <\/p>\n\n\n\n The net result is that group H1 FY25 trading profit declined year-on-year and was impacted by the following issues: <\/p>\n\n\n\n The Group\u2019s H1 FY25 results will be released on SENS and ANS on roughly 28 October 2024.<\/p>\n\n\n\n Despite the guided H1 FY25 year-on-year earnings decline, the group said that it expects its full-year FY25 profit\/loss before tax and capital items to show a meaningful improvement from FY24.<\/p>\n\n\n\n “The full-year performance will be supported by: (a) Boxer trading profit growth; (b) expectations of a much reduced Pick n Pay segment full-year trading loss; and (c) a reduction in H2 FY25 interest charges as a result of the recapitalisation.” <\/p>\n\n\n\n Step one done, step two coming<\/strong><\/p>\n\n\n\n After successfully concluding a R4 billion rights offer earlier this month, the group said that its balance sheet is far stronger. <\/p>\n\n\n\n The group said capital expenditure remains within expectations, and inventory levels are being well-managed at Pick n Pay and Boxer. <\/p>\n\n\n\n The group is now focusing on the second step of its recapitalisation programme, with a planned IPO of the Boxer business on track.<\/p>\n\n\n\n21<\/strong> Weeks Ended 21 July 2024<\/strong><\/td> Sales<\/strong><\/td> Like-for-like sales<\/strong><\/td><\/tr> Pick n Pay sales (SA and Rest of Africa)<\/td> 0.1%<\/td> 1.1%<\/td><\/tr> Pick n Pay SA sales<\/td> 0.6%<\/td> 1.7%<\/td><\/tr> Boxer sales (SA and Rest of Africa)<\/td> 13.5%<\/td> 9.2%<\/td><\/tr> Group turnover<\/strong><\/td> 4.5%<\/strong><\/td> 3.7%<\/strong><\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n\n\n\n
segment sales\u2014have significantly underperformed in recent years and are a key focus area of the
turnaround plan.”<\/p>\n\n\n\nLike-for-like sales growth<\/strong><\/td> 26 weeks ended
25 February 2024
H2 FY24<\/strong><\/td>21 weeks ended
21 July 2024<\/strong><\/td><\/tr>PnP SA Supermarkets<\/td> -0.4%<\/td> 2.0%<\/td><\/tr> PnP SA Company-owned Supermarkets<\/td> -0.5%<\/td> 3.6%<\/td><\/tr> PnP SA Franchise Supermarkets<\/td> -0.3%<\/td> -0.8%<\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n\n\n\n \n
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