Pick n Pay estimated lost sales to the tune of R1.7 billion as a result of trading disruptions during the six months ended August as the ban of alcohol sales in response to the third wave of the Covid-19 pandemic and the civil unrest in KwaZulu-Natal and parts of Gauteng weighed heavily on the group’s performance during the half-year under review. Picture: Simphiwe Mbokazi/African News Agency (ANA)
Pick n Pay estimated lost sales to the tune of R1.7 billion as a result of trading disruptions during the six months ended August as the ban of alcohol sales in response to the third wave of the Covid-19 pandemic and the civil unrest in KwaZulu-Natal and parts of Gauteng weighed heavily on the group’s performance during the half-year under review. Picture: Simphiwe Mbokazi/African News Agency (ANA)

Pick n Pay lost sales to the tune of R1.7 billion due to trading disruptions

By Dineo Faku Time of article published Oct 21, 2021

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PICK N PAY chairperson Gareth Ackerman said yesterday that elements of the government were using the state of disaster to address liquor policy issues without resorting to constitutional processes as the resumption of alcohol restrictions in the six months ended August 2021 hurt the business.

Pick n Pay estimated lost sales to the tune of R1.7 billion as a result of trading disruptions during the six months ended August as the ban of alcohol sales in response to the third wave of the Covid-19 pandemic and the civil unrest in KwaZulu-Natal and parts of Gauteng weighed heavily on the group’s performance during the half-year under review.

Speaking during the financial results presentation, Ackerman said the government’s reliance on restricting alcohol sales as part of its Covid-19 response had been immensely damaging.

“There is a wealth of evidence to show it has little or no positive impact as a public health measure. But it has an immensely negative impact on jobs, on the economy, on confidence in our Covid response, and of course on the performance of businesses like ours.

“Our concern is that the state of disaster is being used by elements of government to address liquor policy issues without resorting to the constitutional processes,” said Ackerman.

He said business and the government depended on each other and called for transparency. “We must avoid those cases where ideology, poor liaison, lack of transparency or intransigence damage our economy, and erode trust,” he said.

The government introduced an alcohol ban at the end of June for 14 days, which was extended until July 25 as cases of Covid-19 climbed.

Pick n Pay believes it lost R800 million in alcohol sales with the liquor business, losing 55 trading days this period as a result of the government’s restriction of offsite alcohol sales. The group said the equivalent period last year was also highly disrupted, with 126 trading days lost. Liquor and tobacco categories grew 86.7 percent year-on-year.

Pick n Pay said the trading period under review was a tale of two halves with the group delivering a strong first quarter result, with sales up 9 percent against the same period last year only to be grappling with looting and the reintroduction of alcohol restrictions in the second quarter.

The group, which operates Boxer and Pick n Pay stores, also reported R930m in lost sales due to the civil unrest and lawlessness. The group had to close 551 stores to protect its employees and customers, while 212 stores were damaged by looting and destruction. Pick n Pay said as a result of the trading disruptions

over the period, most notably the civil unrest in July, gross profit decreased 3.4 percent to R8.4bn, with the gross profit margin lower at 18.2 percent of turnover.

Management estimates that the group would have delivered sales of R47.7bn during this half, up 8 percent on the same period last year. The group posted a 4.1 percent growth in turnover during the half-year ended August at R46bn. The Pick n Pay Clothing business grew sales 26.1 percent year-on-year, a strong recovery from a prior period constrained by Covid-19 trading restrictions. The group said on a comparable basis, ignoring the impact of Covid-19 disruption, Pick n Pay Clothing delivered two-year compound annual growth of 11.6 percent sustaining market share gains with strong growth across womenswear, menswear and childrenswear.

The group said the Pick n Pay’s modernisation programme, Project Future, was on track to deliver its targeted R1bn reduction in costs over two years. An interim dividend of 35.80 cents was declared, up 91 percent from 18.74c a year ago.

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