Johannesburg – Despite difficult trading conditions as consumers continue to battle high inflation amid weak economic growth, Pick n Pay has grown its bottom line 18 percent to R1.1 billion in the 52 weeks to February.
The listed food and clothing retailer says this maintains the positive momentum achieved over each of the past four years.
It reported earnings per share up 17.1 percent to 219.11 and headline earnings per share, a key measure of profitability, gained 18 percent to 264.35c.
However, turnover only gained seven percent to R77.5 billion, and grew 3.4 percent when new store additions are stripped out.
During the year, Pick n Pay refurbished 62 stores and closed 12 under-performing stores, including five franchise and four Boxer stores. “The resulting disruption to trade had some negative impact on turnover growth. However, the improvement in the estate is a valuable investment in the future,” it says.
It now has 106 next generation supermarkets across its Pick n Pay and Boxer brands, which it says provide customers with a better shopping experience.
Pick n Pay opened 68 new Pick n Pay company-owned stores and 25 new Boxer stores across all formats over the year, including 14 Pick n Pay Local convenience stores.
“This growth delivered on the group's intention to open new stores in communities which it had not previously served, and to respond to the growing demand for convenience,” it says.
New stores contributed 3.6 percent to turnover growth.
It also opened 70 Pick n Pay franchise stores over the period, including 32 Pick n Pay Express stores on BP forecourts. There are now 111 Pick n Pay Express stores, more than double the number of two years ago.
“Our franchise partners continue to be a key growth opportunity for Pick n Pay and the group strengthened its support of franchisees during the year by delivering more competitive prices, improving availability and by expanding its administrative and operational support.”
The retailer notes selling inflation was 6.1 percent, a figure it says it achieved through buying better. Food inflation is officially 11 percent.
Read also: Pick n Pay cuts prices of 1 300 food items
Pick n Pay notes it progressed in a number of key areas during the year, and boosted its gross profit margin as well as controlling its costs. “Labour costs, in particular, were contained well below inflation.”
Profit before tax gained 17 percent year-on-year to R1.7 billion, more than double what it was four years ago. This was boosted by its South African unit, which grew this indicator 20 percent, but let down by tough trading conditions in Zambia, which constrained growth in the Rest of Africa division, the retailer says.
Pick n Pay, which is investing R500 million to trim the price of 1 300 essential items – especially fruit, vegetables and food, says it delivered its best availability in over four years, with on-shelf stock availability consistently maintained at 96 percent over the year.
The group declared a 146.6c a share dividend.
BUSINESS REPORT ONLINE