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Pick n Pay earnings dive on lower sales during lockdown

‘The underlying core food and grocery business has been strong,’ says CEO Richard Brasher.

DUDU RAMELA: Pick n Pay has reported a 52% drop in headline earnings per share. This was revealed in its interim results for the six months ended August, 2020. Trading restrictions due to the coronavirus lockdown affected up to 20% of the group’s revenue, and sales were further impacted by reduced trading hours, limits on the number of customers in stores, and temporary store closures. We speak now to Richard Brasher, CEO of Pick n Pay. A very good evening to you, Richard, and thank you very much for joining us. How would you characterise the results?

Read: Pnp to launch Pick n Pay Mobile and Boxercom

RICHARD BRASHER: Well, I actually think that they were quite strong. It’s been an unprecedented period for the world, let alone here in South Africa. I’m extremely proud of the performance of my team, especially the frontline team who kept all the stores open, full and working.

I think that the impact has less to do with the impact of Covid and more the impact of the restrictions that have been taken, not simply by our government, but by governments around the world, to try and slow the spread of the virus. And those impacts are now being felt economically.

But I think that the underlying performance of the business has been strong. And when you strip away some of the challenges that everyone’s facing at the moment, I’m actually bizarrely quite proud that we’ve delivered the result that we have.

DUDU RAMELA: Group turnover increasing 2.6% year on year, for instance. So, when you look at some of the aspects of the results, what would you put that down to?

RICHARD BRASHER: Well, I think if you look at the underlying core food and grocery business, it has been strong. And, as we said in our results, the prohibition was brought in. We couldn’t sell liquor and tobacco for quite a period of time and still can’t sell liquor the whole week. And our clothing business was impacted early on, when they closed the clothing businesses down as well, and our general merchandise business.

I think if you look through that, and you look at the underlying core business, it grew by nearly 10% in South Africa. So in terms of our ambition to feed the nation along with other retailers, in fairness I think that the industry has done a very good job.

DUDU RAMELA: Much has been said about a new way of doing things. What does that phrase actually mean for Pick n Pay?

RICHARD BRASHER: Well, obviously there was a surge with lockdown and people wanting to stay home. And that’s why I celebrate my staff at every opportunity. They went to work so that many people could stay locked down and prevent the spread of the virus.

But I think it changed a lot in that people have become more technologically enabled, they do more online. We saw a big surge in people wanting their groceries delivered to their houses. And therefore I think some of these things are as a consequence of the virus. But I think that some of them will be lasting, which is why today we announced that we’ve purchased an on-demand partner that we’ve been working with over the last 18 months as we bolster our online position as South Africa’s leading online grocery reseller.

DUDU RAMELA: Your outlook for the future?

RICHARD BRASHER: Well, I’m always an optimist. I think that we’ve really weathered quite a barrage over the last six or seven months. We kept our prices down, we kept our shelves full. I think customers have been patient and tolerant with all of the restrictions that they’ve been facing. And we feel like we’re in a good position to face whatever the second half brings. Who knows with the twists and turns of either economies or viruses? But I think with whatever we managed to soak up in the first six months, whatever comes next is going to be better than what we’ve just been through. And therefore I always look forward with hope and optimism.

DUDU RAMELA: Richard Brasher, a very good evening to you and thank you very much for your time.

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