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Pick n Pay posts 18% jump in Heps

SA division (Pick n Pay and Boxer) increased profit before tax by 23.8%.
Pick n Pay CEO Richard Brasher says volume growth of 5.1% represented the group’s 'strongest underlying trading performance for many years'. Picture: Dean Hutton/Bloomberg

Considering the state of the economy, consumer spending and retail sales, Pick n Pay shot the lights out in the year to March 3.

Over a period in which retail sales and economic growth have barely lifted above 1%, its results, adjusted from a 53- to a 52-week year, show turnover growth of 7.1% (7.4% in South Africa) to R86.3 billion from R80.5 billion, with like-for-like turnover growth of 4.8% and 110 net new stores, adding 2.3% to turnover growth.

Volume growth of 5.1% represented the group’s “strongest underlying trading performance for many years,” CEO Richard Brasher said. The gross profit margin increased to 19% from 18.9% despite internal selling price deflation of 0.3%, which compares against general food inflation of 3.4%. Profit before tax was up 17.3% to R2.07 billion from R1.77 billion, with the margin improving from 2.2% to 2.4%, putting the group in sight of its 3% target.

The core South Africa division (Pick n Pay and Boxer) increased profit before tax by 23.8% to R1.8 billion from R1.5 million, while rest of Africa operations struggled especially in Zambia and Zimbabwe, where the currency devalued by 97%. Pre-tax profit in the rest of Africa dropped 16.2% to R241.3 million from R287.9 million. Nevertheless, the group continued to open new stores in Africa and plans to finally open one in Nigeria.

Group headline earnings per share grew 18% to 326.71 cents from 276.98 cents and diluted headline earnings by 18.8% to 322.65 cents (271.61 cents). Its full-year dividend of 231.10 cents per share was up 22.4%.

Smart Shopper, which now has 7.2 million active members, offered R6.6 billion in personalised discounts last year, with redemptions up almost 30%. Value-added services income was up 41.5% year-on-year, including a new banking partnership with TymeBank, which opened over 250 000 accounts in just three months.

Counter the trend of its competitors, whose share prices were up by mid-morning on Friday, Pick n Pay was trading almost 3% lower, indicating results hadn’t met expectations, although its share price rose earlier this month on its pre-results trading update.

Exuding confidence in the outcome of some years of implementing “a clear and simple plan”, Brasher said the results reflect a relentless focus on a growth strategy in a “game which is about the inches, never about the yards”.

This has included a focus on improving cost and operational effectiveness, which allowed the group to provide “a winning customer offer” through lower prices, better promotions, better and more innovative products, compelling value-added services, and brighter and more modern stores. 

Pick n Pay reduced prices on thousands of products, particularly on fresh produce, meat, and commodities

Brasher said customers “love deflation”, which is something that companies find “very hard to live with”, adding that while deflation was rare in South Africa, he had had experience overseas of operating in a deflationary environment. Chairman Gareth Ackerman said the group’s focus on price equated to one free weekly shop per customer for the year, adding the group was reaching more customers than ever.

Pick n Pay’s own brands now account for 21% of sales and continue to grow. It launched 500 own brand products and redesigned 700 products.

The group has become more efficient and reduced costs. Interestingly, it is using less electricity than it did 10 years ago despite its growth, and like-for-like electricity costs were down 1.8%. Its supply chain is now 75% centralised, from 65% previously.

The group’s discount Boxer business showed double-digit customer growth and 60% sales growth on own brand products. It opened 26 stores to bring its total to 270, and Brasher said it “can easily double its size”.  

New stores also include 42 corporate and 62 franchise, with a further 37 liquor stores and 23 clothing. It closed 20 stores.

Financial services remain high on the group’s agenda, as do online sales, which grew 25%, with a 90% increase in visitors to its site click and collect sales more than doubling to account for 10% of order volume.

Brasher expects the next year to be “more for less”, with more promotions, more stores, and more own brand innovation, but lower prices, operating costs, stockholding and waste.

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Please use that extra to hire extra tellers. I always have to stand in a queue never at Spar so now I use Spar.

Worse than Home Affairs.

their smart shopper card is a joke – R1.00 off potatoes, R2.00 off onions.LOL!!!
can you imagine when someone wants to deposit/withdraw from their tyme bank account??? chaos at the tills!!!

over 3 yrs pnp share price down 6.17% – 5yrs up 16.85%!!! says it all!!

We had to return some packets of PnP housebrand peanuts ( Country of origin China) as they were stale and tasted awful. So we will be buying SA grown peanuts in future. The PnP buyers should do the same.

they’re successful – for now.You can wait forever at pnp because there are so few tellers,and then they are incredibly slow compared to say Spar.I agree with pwgg that Spar is the place to shop.I seldom wait more than 5 mins to be served at my local one.I think that pnp was too hasty in retrenching experienced staff and will pay for it in due course.

End of comments.





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