PnP group interim financial results extremely disappointing – chairman

The interim financial results of the Pick n Pay group for the 26 weeks between March and August is extremely disappointing, chairman, Gareth Ackerman has said.

These six months were among the most difficult South African consumers had to endure in the recent past, with load shedding reaching its worst level since 2008. Food inflation topped 14% in March, its highest level in 14 years, the price of fuel increased by about 20% and Interest rates reached their highest point since 2009.

“When I spoke to you a year ago, I referred to several worsening problems in the macro-economic and socio-economic spheres. Today, I am disappointed that we have seen little or no progress in addressing them,” he said.

“South Africa is negotiating one of its most turbulent periods since 1994 and there is significant uncertainty about the country’s future trajectory. The performance of Pick n Pay to some extent reflects the difficulties in the economy and society.”

He said despite the group’s pride in their efforts to offer consumers lower prices and to maintain internal price increases well below food inflation, there was no way to escape the fact that the group’s performance was incredibly disappointing.

“However, there are some encouraging signs and the Pick n Pay story is really one of two main operating brands – Boxer and brand Pick n Pay. Boxer delivered double digit South African sales growth and is the main growth driver for the group at the moment.”

According to Ackerman, the 454 Boxer stores delivered on the promise of the lowest possible prices to support millions of lower-income customers through challenging times. He said the same could be said of Pick n Pay Clothing, where sales at standalone stores also grew in double digits, which he believed was proof that this strategy was working.

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Core Pick n Pay business did not meet expectations

“However, the performance of our core Pick n Pay business has not met expectations. The board reflected on the latest performance of the Pick n Pay grocery business and resolved that decisive action was required – if we want to turn this business around from its current trajectory – and appointed Sean Summers as CEO to lead the company with immediate effect.”

Ackerman also referred to the close connection consumers had with Pick n Pay, where they felt the group was on their side, making the group the clear grocery market leader in South Africa. He said Summers’ task would be to re-establish that connection, rekindle customers’ love for the Pick n Pay brand, and make it a meaningful part of their lives once more.

“A key element of the shopper experience will be improving levels of customer service in our supermarkets by energising staff and focusing their efforts. We also recognise that we must improve our relationships with our suppliers, understanding their businesses and supporting them in a mutually beneficial way.”

He also pointed out that the group had to optimise the performance of the 130 stores upgraded in the past 18 months and ensure that they achieved an appropriate return on investment.

“These are the non-negotiable basics of retailing. They have served us well for nearly 60 years and they will do so in future.”