Pick n Pay reports substantial losses, declares no dividend

Pick n Pay declared a no dividend due to disappointing financial results for the 26 weeks to 27 August 2023. The group spent just under R400-million on diesel, which added to the growth of its expenses and limited its ability to respond to the strong promotional activity of its competitors.

It also parted ways with its group CEO, Pieter Boone and appointed Sean Summers – a very successful CEO who served the group from 1999 to 2007.

“I hit the ground running and 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 says.

“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.”

Summers says the group’s buying capabilities need improvement, and it will engage closely with its suppliers as a matter of urgency.

“We must rekindle customers’ affection for the Pick n Pay brand and energise our staff to focus their efforts on the critical road ahead.”

The group’s turnover did increase 5.4% thanks to an exceptional performance from Boxer in South Africa, which grew 16.1%. The turnover of Pick n Pay stores only increased by 0.3%, while comparable growth at Boxer was only 4.2% which means that new stores were responsible for growth, with 27 new Boxer stores having opened during the 26 weeks under review.

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Pick n Pay trading expenses increased

Trading expenses increased 13.7% and included R190 million for energy costs and R259 million for employee restructuring costs.  Apart from these two items, underlying trading expense growth was 9.1%. 

The group says its trading profit of R31.8 million would have been R597 million if it did not incur incremental abnormal costs of R565 million (R190 million energy costs, R116 million duplication of supply chain costs from the Longmeadow/Eastport DC handover and R259 million employee restructuring costs).

A 47.3% increase in net finance charges also affected profit before tax and this resulted in a loss before tax and capital items of R837.2-million.

Pick n Pay Clothing performed very well, growing sales by 13.8% in standalone stores, with 20 new company-owned stores. Another 60 new stores will be opened this year. Online sales also grew by 76.3%, driven by the Group’s on-demand platforms Pick n Pay asap and Takealot’s Mr D, with on-demand sales doubling compared to a year ago.

Value-added services income grew 13.5% as the group focused on maximising opportunities in banking and financial services, as well as mobile. The Rest of Africa segment contributed R2.7-billion of sales, an increase of 14.4% compared to a year ago.

Pick n Pay also bought Tomis – a state-of-the-art abattoir and meat packaging business – to improve the quality of its fresh meat offering.