Skip to main content

PnP to spend R1.8bn on new stores

Retail chain Pick n Pay said it would spend R1.8 billion on opening new stores and refurbishing old ones this year as it looks to accelerate its turnaround strategy to win back market share. The company reported an 18 percent rise in profits for the year ended February.

Pick n Pay shares dropped 4.4 percent to close at R61.69.

Chief executive Richard Brasher said the results indicated that the group had maintained momentum of the past four years as it has tightened its operating model and centralised its supply chain in the process.

 “We are now a much better business for our customers than we were four years ago,” Brasher said. “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.”

The company, which was once regarded as the favourite by customers and investors alike, has ceded its market share to rival Shoprite in recent years. But yesterday it said it was confident that it would meet its investment requirements through internal cash-generation and cost-effective short-term borrowings.

A leaner and meaner Pick * Pay has emerged since Brasher took over the reins at the company in 2013.


The former Tesco chief executive has put his energies into turning around the fortunes of Pick n Pay.

When he left Tesco in 2012 it had a turnover of £4 billion (R67.39 billion) and generated a trading profit of £2.5 billion. It remains the largest private employer in the UK, with more than 2800 stores.

For the year ended February, Pick n Pay’s headline earnings per share went up by 18percent while the company opened 151 new stores in the period.

The company’s trading profit rose 17 percent year-on-year to R1.7 billion, more than double the profit of four years ago. Turnover increased 7 percent from R72.4 billion in the last reporting period to R77.5 billon in the period under review.

The company attributed the moderate turnover growth to the difficult consumer environment in South Africa.

The group said it would pay a dividend of 176.30 cents a share for the year, up from the 149.40c it had declared in the corresponding period. As part of speeding up its turnaround plan, the company earlier this year introduced R500 million in investment on lower prices and modernised its Smart Shopper Loyalty scheme.

Basher said the group was determined to make good of its turnaround blueprint as to unlock value for shareholders.

“Pick n Pay is determined to succeed in this new normal by accelerating the pace of its plan, in particular by reducing its costs further in order to create additional headroom to deliver lower prices and better value for customers.”

Pick n Pay chairperson Gareth Ackerman said the company’s turnaround plan had begun to pay off.

“We are now a more centralised business, a more efficient business, with better service and more innovation,” Ackerman said. “We have picked up pace and have pursued a clear plan under Richard Brasher’s leadership over the past four years. This is demonstrated in the result today.”

An analyst at Vestact, Sasha Naryshkine, said Shoprite would continue to hold the lion’s share of low-income customers. “Despite the high expectations that Pick * Pay captures significant market share away from Shoprite and other food retailers, Shoprite was still well placed to leverage on growth opportunities in the low-income consumer market segment and those customers that are trading down due to a slowdown in economic growth,” Naryshkine said.


Pin It

Related Articles

Sixty60 promises lightning-fast delivery of 10 ...

Checkers Sixty60 is beta testing the new and improved version of its app, enabling customers to shop for over 10 000 larger Hyper products, with same day delivery scheduled within a 60-minute time slot. 

Pick n Pay launches new money transfer service,...

Pick n Pay has set a new standard in affordability and accessibility with the launch of its store-to-store Domestic Money Transfer service. At R8.00 per transaction, it is the cheapest price for customers within retail stores.

Retail tech: what to expect in 2024

By Mike Smollan, Chief Growth Officer at Smollan With technology constantly on the move, the retail industry has no choice but to adapt to keep pace and up to speed with the broader changing face of consumer expectations.

Retail trend riptides: time to sink or swim

By Nicola Allen – Senior Retail Analyst, Trade Intelligence Retail trends do not occur in isolation; they are the result of macro influences that shape consumer and shopper behaviour and retailer strategies. In the ever-evolving world of retail, ...

FNB offers the cheapest licence disc renewals i...

By: Myles Illidge - MyBroadband FNB recently slashed the pricing of its licence disc renewal service from R171 to R99, including delivery, making it the cheapest provider in South Africa.