DURBAN - Pick n Pay shares shot up more than 10percent in early trade on the JSE yesterday after the retailer announced that its trading profit had increased 4.9percent to R1.82billion during the year end to February, while trading profit had risen 19.3percent.
The retailer said its trading profit margin had improved from 2.2percent to 2.5percent after it invested R5.3bn to open new stores and refurbish existing ones in the last three years, adding more than 13700 new jobs to its portfolio.
Chief executive Richard Brasher said the group planned to create more jobs in the next three years.
“During the next three years, we will create another 15000 new jobs, bringing many young people into the world of work and the opportunities that retail provides to build a career and progress in the world,” Brasher said.
Pick * Pay embarked on a restructuring drive between March and August last year, which was paying R250million as part of its voluntary severance programme (VSP).
The group said the benefits were evident in an exceptional third quarter trading performance, with the South African segment delivering sales growth of 8percent.
“This was well ahead of the market and was achieved against internal selling price inflation of 0.2percent, with positive volume growth of 5.1percent,” Brasher said.
Turnover had increased by 5.3percent to R81.6bn, up from R77.5bn in the previous year, while headline earnings per share surged 7.1percent to 276.98cents a share, up from 258.65c for the year.
It declared a final dividend of 155.40c a share, bringing the total for the year to 188.80c.
Africa operations contributed R4.6bn of segmental revenue this year, up 7.7percent on last year, with TM Supermarkets delivering strong profit growth.
Pick * Pay’s share of TM’s profits was up 45percent year-on-year, or 58.5percent growth in local currency.
In Zambia, stronger operational efficiency and tight cost control tempered the impact of the tough trading environment on sales growth.
Jordan Weir, an equities trader at BayHill Capital, said it was more of a strategic year for Pick * Pay when it came to looking into its results and performance.
“There are a lot of positives and one or two negatives, with regard to the once-off cost of their voluntary severance programme.
"In general, when separating the once-off VSP cost, the numbers weren’t so severe at all.
"Growth in its online shopping segment, new forthcoming financial services offering to clients, greater centralisation of its supply chain and a more aggressive focus on bringing costs down for its clients were some of the greater highlights of their recent financial period,” Weir said.
He added that it had been a tough year decision-wise for Pick * Pay, but one that had been needed.
“The platform has now been set for Pick * Pay to traject its growth into 2019 and beyond,” Weir said.
Yesterday Pick * Pay shares on the JSE closed 8.9percent higher at R75.