Cape Town-headquartered grocery, liquor, general merchandise and clothing retail group Pick n Pay Stores Limited has delivered a strong half-year performance for the period ending 28 August 2022, upping headline earnings per share by double digits in an increasingly competitive market.
Pick n Pay posted a 25.3% increase in interim headline earnings per share (Heps) on a pro forma basis, which came in at 88.76 cents compared to 70.85c for the corresponding half-year.
Group turnover also grew by double digits at 11.5%, up from R46 billion to R51.3 billion.
The better performance saw the retail giant increasing its interim dividend per share by 25.3% – from 35.8c to 44.85c. It also shows that Pick n Pay’s investments into growth, through its Ekuseni strategic plan, is already starting to pay off.
“The Group delivered a positive performance in its first trading period under its new Ekuseni strategic plan, launched in May 2022,” it notes in a results statement.
“Group turnover was up 11.5% year-on-year. Even when normalising for disruptions in the base period – due to the civil unrest, and Covid-19 liquor restrictions last year – Group turnover increased by an encouraging 8.2%,” it adds.
Pick n Pay increased its profit margin from 18.2% to 19.4%, however, trading expenses also increased – up from R8.9 billion to R9.8 billion.
“The gross profit margin in the base period was depressed by the cost and disruption of the July 2021 riots. Taking this into account, the gross profit margin contracted on a normalised basis by 0.6% points – reflecting planned investments in lower prices, and significant increases in energy costs,” the group says.
“Pro forma profit before tax in South Africa increased 17.1%, despite increased insurance and security costs following the July 2021 riots, inflationary pressures, and planned costs associated with implementing the Ekuseni plan,” it adds.
The group has for the first time segmented the sales growth achieved by Boxer and by Pick n Pay respectively in South Africa. Boxer stores target the lower end of the retail market.
“Boxer South Africa delivered a market-leading performance, with turnover growing by 27.2% to R15 billion,” notes the retailer.
“This underlines Boxer’s position as a consumer champion among lower-income customers in search of unbeatable value and service. The Group is on track to double Boxer sales over the four years of its Ekuseni plan.”
Pick n Pay South Africa grew sales 5.4% to R34.5billion. “This was a respectable performance in a tough market,” says the group.
Commenting on the results, Pick n Pay CEO Pieter Boone says he is very pleased with the progress achieved across Pick n Pay and Boxer over the past six months.
“The launch of our Ekuseni strategic plan in May was a landmark moment for the Group. I am proud of what our teams have achieved in the five months since that launch,” adds Boone.
“We have unveiled a totally new retail banner in Pick n Pay QualiSave – dedicated to customers who want Pick n Pay quality at exceptional prices. We are rejuvenating our Pick n Pay stores at pace, and the sales growth and customer feedback in these stores is very encouraging,” he says – Harare