Pick n Pay on Wednesday announced an 18 percent increase in headline earnings per share on turnover growth of 7 percent, describing the performance as “sustainable growth for the new normal” in the retail environment – tougher competition for hard-pressed consumers.
“In our low-growth economy, competition for the hard-pressed customer is going to be the new normal,” the grocer said in a statement: “At all income levels, people are finding it harder to make ends meet.”
The company said it had “provided meaningful support to customers in a tough year by buying better and running a more efficient business”.
A greater proportion of goods were brought into its centralised supply chain, it had improved the efficiency of its distribution centres as well as managing shrink and waste better, it said.
Pick n Pay chairman Gareth Ackerman said: “We have improved our offer, modernised our stores, centralised our supply chain, and controlled our costs, delivering consistently better returns for shareholders as well as a better shopping trip for customers.”
The grocer said increases in like-for-like trading expenses and employee costs had been contained to 3 percent despite inflationary pressures. Selling price inflation had been held at 6.1 percent versus consumer price index food inflation of 11 percent, it added.
The company said it had opened a net 151 new stores during the year under review and invested R1.9 billion on “improving the estate”.
The offering within those stores keeps expanding too. The company said it had also launched more than 1,700 new or repackaged private label products over the last two years.
Another “new normal” experience for shoppers is the array of goods on offer. Gone are the days when one went to the grocer for groceries. Today you can pick up booze, airtime, holidays, insurance, all sorts.
Pick n Pay reported strong growth in commissions and other income, which increased by 22.3 percent to R398.2 million. This reflected a “solid performance” across all categories of value-added services, including income from prepaid electricity, third party bill payments, ticketing and travel, and financial services.
The grocer said total comprehensive income for the year to the end of February was R1.148 billion, up from R1.140, on turnover of R77.5 billion, up from R72.5 billion.
Chief executive officer Richard Brasher said the results showed the company had maintained the positive momentum achieved over each of the past four years.
“We are now a much better business for our customers than we were four years ago. With a cost-effective and efficient engine and effective platforms for long-term growth … we are well advanced on our journey to restore a sustainable profit margin to the business.
“A fitter and stronger Pick n Pay is important because our customers need our help more than ever.”
Another factor that will make Pick n Pay popular with the man in the street is that 4,500 new jobs were created during the year under review.
Headline earnings per share were up from 224.04 cents to 264.35 cents.The board declared a final dividend of 146.40 cents per share, bringing the total dividend for the year to 176.30 cents. This is an increases of 18 percent on the prior period, and maintains a dividend cover of 1.5 times headline earnings per share.
The company’s plans to build on these results in 2017, its 50th anniversary year, include a “return to its roots”.
“This year we celebrate 50 years since Pick n Pay was founded by Raymond Ackerman. He built the company by being the consumer’s champion, fighting for lower prices and best value,” the statement added.
“We have made a strong start in the past few weeks by investing R500 million in permanently lower prices on 1,300 every day grocery lines and by modernising our Smart Shopper loyalty scheme to deliver weekly instant discounts.
“We will build on this throughout the year as we continue to build a better Pick n Pay – better for customers, better for colleagues and better for shareholders.”