Pick n Pay’s financial results for the last six months reflected a “particularly challenging period” and were not great, according to financial results the retail group published on Wednesday.
The impact of the energy crisis has had a devastating impact on the retailer and has led to the group forking out just under R400 million on diesel.
“The Group spent just under R400 million on diesel which added to expense growth, and limited its ability to respond to strong competitor promotional activity,” Pick n Pay said.
In terms of overall turnover, the group only saw a 5.4% growth (like-for-like 2.3%).
There was some light at the end of the tunnel, with the group noting an exceptional performance from their Boxer retail stores. The low-cost grocer saw 16.1% growth.
“The gross profit margin came under pressure and declined 0.9% to 18.5%. Trading expenses increased 13.7%,” it said.
“However, this included R190 million net incremental energy costs and R259 million employee restructuring costs. Excluding these two items, underlying trading expense growth was 9.1% (5.7% like-for-like)”.
Pick n Pay said in the statement that their trading profit of R31.8 million would have been R597 million were it not for R565 million of incremental abnormal costs.
“Profit before tax was further impacted by a 47.3% increase in net finance charges. This resulted in a pro forma loss before tax and capital items of R837.2 million.”
Pick n Pay has confirmed that it would maintain its capex guidance at R4 billion for FY24, which would support the full momentum on its Boxer, Clothing and Online growth plans.
In early October, Pick n Pay’s chief executive Pieter Boone stepped down with immediate effect.
Boone was replaced by former CEO Sean Summers.
Pick n Pay chairman Gareth Ackerman said that while he appreciated the work done by Boone, the company’s performance over the last few months have been challenging.
“He became our CEO while the Covid pandemic was still raging, and has led the business through some extraordinary challenges, including the transition out of the Covid lockdown, the unprecedented civil unrest in 2021, and the current load shedding crisis,” Ackerman said.
“Unfortunately, in a very difficult environment, the performance of our core Pick n Pay business has been very challenging over the past months, and has not met expectations. Pieter accepts that the Board has decided on a change in leadership.”
HOPE FOR THE COMPANY
In the wake of the company’s disappointing financial results, new CEO Summers stated that he is focused on Pick n Pay’s core business.
“I have hit the ground running. My focus is to return the core supermarkets business to growth and profitability, and maintain the growth of other key parts of the business,” Summers said.
“This is an exceptional company with a much-loved brand and a rich heritage. We have a lot of work to do, and I have received strong support from our people. They want to see Pick n Pay succeed, and my task will be to see that we work hard on the basics and improve significantly, both on customer service and on execution in our supermarkets,” he said.