Pick n Pay cashes in on food during pandemic

The year of pandemic was a good one for retailer Pick n Pay Group.

The financial year ending 28 February saw market-leading sales growth of 10% in core food and groceries in South Africa, underpinned by sustained improvements across the group’s customer offer.

However, group earnings were affected by trading restrictions on non-essential goods and services during parts of the lockdown, which resulted in an estimated R4 billion in lost sales. The group’s operational response to Covid-19 also cost an additional R200 million.

Despite this, group earnings decreased by only 6.1% year-on-year, excluding once-off costs. Gross profit increased by 4.7% to R18.4 billion, with the gross profit margin rising to 19.8% of turnover.

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The group invested in lower prices, better value and improved service for customers through its Project Future, launched last year to drive modernisation and efficiency, delivering R600 million of cost savings.

Highlights included:

• Core food and grocery performance up by 10% year-on-year
• Increased market share for Boxer
• Internal selling price inflation kept to 3.8%
• Improved trading densities
• 112 new stores, bringing to a total of 1,994 Pick n Pay and Boxer stores
• Market share gains for Pick n Pay Clothing
• Rapid expansion of its online grocery platform
• 5 million active Smart Shopper members
• Gross profit margin expansion
• Positive net cash position of R132.5 million, R500 million stronger than last year on a like-for-like basis
• Its Feed the Nation campaign raised R136 million in hunger relief, providing 28 million meals.

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The group’s Rest of Africa division delivered profit before tax of R148.1 million before the application of hyperinflation accounting, up R58 million on last year.

“I am very proud of this performance. Our market leading sales growth in a difficult environment shows how we have kept our focus on our customers in the most challenging of times,” Pick n Pay CEO Richard Brasher said.

Brasher is leaving his post and will be replaced by Pieter Boone.

Pick n Pay chairperson Gareth Ackerman used the opportunity to voice his concern about the vaccine roll out in the country.

“The longer it takes, the longer South Africans remain unprotected from this terrible virus and the greater the risk of a third wave, as well as the possibility of new virus variants emerging,” he said.

Calling for more transparency, he said this was lacking when decisions, such as the frequent restrictions on the sale of alcohol for 209 days in the past year, were made.

“A recent example was the alcohol ban over Easter only at off-premises retail stores, while allowing larger groups of people to gather.”

He questioned how allowing people to drink in bars, restaurants and taverns was somehow safer than having a glass of wine at home was never made clear.

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“We hope that decision makers will start looking more closely at available and reliable data to make more informed, evidence-based policy decisions and communicate this openly and clearly in order to earn the confidence of South Africans and avoid making political decisions during a state of disaster.”