Pick n Pay lost an estimated R2.8 billion due to Covid-19
JOHANNESBURG - Pick n Pay lost an estimated R2.8 billion in sales in the six months ended August due to measures taken by governments to contain the spread of the Covid-19 pandemic.
Chief executive, Richard Brasher said although the pandemic inevitably impacted the group’s sales and profit, Pick n Pay had delivered a resilient result, with many reasons to be positive about the future.
“Customers had a very difficult six months, with unemployment reaching record levels and many families suffering sharp falls in income. We responded by getting even tighter on our costs, investing R500m in the price on everyday essentials, deepening our promotions and providing even better offers to Smart Shoppers. Our internal inflation was held below CPI Food, and our investment delivered market share gains in edibles, perishables and fresh categories,” Brasher said.
Brasher said that during the lockdown, customers inevitably spent more time at home, and more time cooking, baking and snacking.
“We put more emphasis into our own brand, with participation now close to 25 percent in Pick n Pay and Boxer, and very pleasing double-digit growth in own-brand edible groceries, baby, toiletries, canned, and household goods,” Brasher said.
Trading restrictions affected up to 20 percent of revenue at different stages of the lockdown, and sales were further impacted by reduced trading hours, limits on the number of customers in stores, and temporary store closures, said the group.
Trading profit fell 25.4 percent to R885.6 million from R1.billion a year earlier. Turnover 2.6 percent to R44.2bn up from R43.1 bn during the six months ended September 2019. Turnover from South African operations was up 3.4 percent to R42.7bn from R41.3bn in 2019.
Core retail sales – including food, groceries and general merchandise, but excluding liquor, clothing and tobacco – grew 8.7 percent year-on-year, with 9.9 percent growth in South Africa, representing a 4.2 percent volume growth in the group’s core food and grocery offer in South Africa.
However, liquor and tobacco sales plummeted 47.5 percent as a direct result of the government restrictions on the sale of liquor and tobacco products through much of the nationwide lockdown.
Liquor sales were completely prohibited for approximately 15 weeks of the reported 26-week trading period, with the remainder subject to reduced trading days and hours while the sale of cigarettes and other tobacco products was barred between 27 March and 17 August.
“Looking to the longer term, the group will continue to grow its liquor business through targeted investment in safe and convenient stand-alone stores, with a focus on a broad range of local wines and craft products, including our innovative beer and gin category,” said Brasher.
Headline earnings declined 56.3 percent year-on-year excluding hyperinflation in Zimbabwe, reflecting the impact of R150 million of additional operating costs directly related to the Covid-19 pandemic, and R100 million of one-off costs of a voluntary severance programme (VSP) launched at the beginning of the financial year. The headline earnings were down 38.6 percent excluding the once-off costs of the VSP.