Global Courant 2023-05-04 11:51:09
Pick n Pay says it delivered an “encouraging performance” in its financial results for the year ended February 26, 2023, despite the detrimental impact of the divestment on its bottom line.
The group said underlying earnings exceeded the largely flat expectation in previous communications to the market; however, the additional costs of running diesel generators, especially in the second half of the trading year, negatively impacted earnings.
Group sales increased by 8.9%, Boxer’s by 20.2%. Boxer also opened 60 new stores, with an additional 200 stores expected in FY26.
Pick n Pay South Africa’s sales growth was 4.3% (3.5% Like-for-like), but sales were impacted as the group began implementing its new customer value proposition (CVP).
In addition, the fully converted Pick n Pay QualiSave stores achieved sales growth of more than 10% after the conversion.
Pick n Pay apparel also recorded sales growth of 15.3% at its standalone stores and opened 58 new stores in the year.
Online sales also grew 72%, while on-demand sales also grew more than 100%, the group said. It said growth was driven by ASAP! and the new partnership, Mr. D, launched last October.
However, the group spent an incremental R522 million on diesel to run generators (R430 million net in electricity savings), with the group also incurring expected costs of implementing its Ekuseni Plan – a strategic plan to drive growth in some of the key areas of the business.
The group said it capped like-for-life cost growth to 7.9% due to R800 million in efficiency savings under Project Future.
Internal inflation was contained at 8.5%, below the CPI at 10.4%, due to cost containment and efficiency improvements.
Group gross profit margin was relatively flat at 19.6%, with pro forma profit before tax declining 15.1% year on year, reflecting underlying net energy costs of R430 million.
Underlying profit before tax reached about R2.1 billion, up 7% year-on-year, the company said.
Pick n Pay declared a total dividend of 185.15 cents per share for the year, down 16.3% from 221.15 cents the year before.
“Like everyone else in South Africa, we have been experiencing significant inflationary cost pressures, exacerbated by an unprecedented tax deterioration,” said Pieter Boone, CEO of Pick n Pay.
Despite the pressure the group faced, Boone said it had taken three key steps:
“First we kept a close eye on the ball and kept our costs under control. It was a significant achievement to limit like-for-like cost growth in Pick n Pay South Africa to just 5.6%, despite significant additional costs from the divestment.
“Second, our cost control enabled us to keep our price increases well below CPI food. I know this is really important to every family in this country, and our commitment is that we will continue to do everything we can to keep prices down for the next year.”
“Third, despite the external headwinds, we developed, launched and implemented our strategic plan Ekuseni.”
2023 expectations
Boone said the group is accelerating its energy resilience plan to reduce the cost of buying diesel to combat divestment.
He urged stakeholders to look beyond the effects of the load shedding and instead focus on the underlying progress the group is making with the Ekuseni plan.
“It’s going to be another tough year. But I’m confident in our plan and in the ability of our teams to execute it,” concludes Boone.
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