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Pick n Pay’s Boone boldly goes on the offensive to place firm on firmer footing

PICK n Pay flags it expects its annual headline earnings per share to rise up to 18 percent despite the double-edged sword of national unrest last year and national lockdowns during Covid-19. Picture: Simphiwe Mbokazi, ANA.

PICK n Pay flags it expects its annual headline earnings per share to rise up to 18 percent despite the double-edged sword of national unrest last year and national lockdowns during Covid-19. Picture: Simphiwe Mbokazi, ANA.

Published Apr 7, 2022

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AS PICK n Pay yesterday flagged that it only expected its annual sales to rise 5.2 percent, its chief executive Pieter Boone yesterday sent a strong message to shareholders that he plans to place the retailer on a firmer footing, targeting both affluent and low income earners, amidst strong competition.

Ahead of the retailer’s annual results set to be released on May 17, he said, “I will present my strategy to deliver greater innovation, growth and momentum by making Pick n Pay much more responsive to the needs of our customers.”

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This as Shoprite last month grew its interim headline earnings per share by 25 percent to 519.3 cents, while grabbing affluent customer market share from Woolworths with a repositioning of its Checkers brand.

Yesterday Pick n Pay said it aimed to revitalise customer value proposition with a simpler and more compelling approach to differentiating its stores so that each store felt local and excited customers.

“This will build on excellent progress over the past year in strengthening our offer to more affluent customers, with the successful refurbishment of 40 Pick n Pay Select supermarkets, all of which are delivering strong customer growth through innovation in product, design, layout and convenience,” it said.

The group aimed to offer even lower prices, better value, and better service to customers to attract low-income customers.

“This will be particularly important to lower-income customers in a period when spending power is likely to be further squeezed. Core to this will be the delivery of R3.0 billion of savings over the next three years through Project Future – with identified efficiencies across our operations delivering a swifter and more efficient business,” it said.

In another move to target low-income customers Pick n Pay said it planned a further acceleration in the development of its Boxer limited-range discount business. Basher in October announced plans to expand its Boxer store footprint by 200 stores.

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Yesterday Pick n Pay flagged in a trading and earnings update for the 52 weeks ended February 27, 2022 that it expected its annual headline earnings per share (Heps) to rise up to 18 percent despite the double-edged sword of national unrest last year and national lockdowns during Covid-19.

Heps were likely to rise between 8 percent to 18 percent to 247.65 cents a share to 270.59c a share from 229.31c a share in the prior corresponding 2021 period.

Earnings per share were likely to increase at between 18 percent to 28 percent at between 238.97c a share to 259.22c a share.

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Pick n Pay said its group sales rose 5.2 percent to R97.9 billion, with its South Africa segment increasing sales by 5.1 percent to R94.5bn, with like-for-like sales growth of 4.4 percent, with internal selling price inflation restricted to 2.9 percent over the year. Its Rest of Africa segment increased sales by 5.6 percent.

“Sales performance reflects impact of significant trade disruption. Over the course of the year, the Group’s trading performance was disrupted by two factors: severe damage to trading and property as a result of the civil unrest in July 2021 and – to a lesser extent – the resumption of trading restrictions over the sale of liquor in June 2021,” the group said, adding that these disruptions resulted in an estimated R2.7bn of lost sales over the year.

Despite diverting resources to rebuilding stores and distribution centres after the civil unrest, Pick n Pay opened 138 new stores.

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Liquor sales increased 57.2 percent year-on-year, despite the group losing a further 66 liquor trading days this year as a result of Covid-19 trading restrictions, with an estimated R0.9 billion in lost sales from R2.5bn in 2021.

The clothing division saw sales growth of 21 percent year-on-year, driven by market share gains across a number of women’s, men’s and childrens-wear categories.

Pick n Pay’s on-demand online service ASAP! had delivered year-on-year growth of more than 300 percent since its launch in August 2021, it said.

Commenting on the results, Boone said it was a resilient trading performance in some of the most difficult circumstances the group has ever faced.

“Our Pick n Pay and Boxer businesses have a strong presence in KwaZulu-Natal and Gauteng and were badly affected by the rioting and looting last July. However, our growth in the first quarter, and again in our final quarter, shows that our underlying momentum remains solid.”

Looking ahead, Boone said the external environment had become more volatile, particularly as a result of events outside South Africa.

“However, we have an excellent plan, and are now delivering on it. I am excited by the future of our business,” he said.

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