Pick n Pay halts dividend after profits decline
Pick * Pay said its profit after tax fell to R1.91billion, despite a 15.2percent increase in South Africa to R1.78bn.
The retailer said its turnover increased 3.5percent to R89.3bn, and headline earnings per share advanced 2.6percent to 287.89cents. However, the group said its earnings per share plunged 11.7percent to 250.90c.
Chairperson Gareth Ackerman said the group decided to forfeit a final dividend of 173.06c in order to preserve cash, as a result of the upheaval caused by the Coronavirus outbreak. Ackerman said the pandemic was a massive shock to the economy, just when the country thought it had hit rock bottom.
He said the group needed to make the right decisions now to safeguard its future.
“This is why, after much deliberation, we have taken a difficult decision to defer our annual dividend. In normal circumstances, on the back of these results, the group would recommend a final dividend in line with our dividend cover of 1.3 times headline earnings per share,” Ackerman said.
Chief executive Richard Brasher said the group’s Pick * Pay and Boxer units performed against a strong base last year. “We have delivered seven successive years of sales and PBT growth, a record of consistent progress that few others can match in tough times,” Brasher said.
The group said many current and future uncertainties remained on the impact of the pandemic.
Brasher said it would be difficult to predict and estimate or quantify the likely impact over the full financial year.
Lulama Qongqo, an investment analyst at Mergence Investment Managers, said the results were underwhelming and below estimate.
Qongqo said even the performance of Pick * Pay’s local operations was doubtful, considering that management highlighted a profit before tax growth number within a higher tax rate that resulted in them missing expectations.
She said the group’s decision to prioritise the safety of its employees was, however, commendable, adding that Brasher’s leadership would be key to navigate the period.
“Brasher is not resigning as expected, and it is positive news for the group, and I agree that the company needs stable leadership during these volatile times. These are things we obviously don’t see in their numbers and are underrated,” Qongqo said.
Pick * Pay shares closed 14.96percent lower at R50.58 on the JSE yesterday.