Skip to main content

Pick n Pay keeps inflation at bay

| Retailer trading results

The retailer earned less in franchise fee income from Express stores due to a new agreement between Pick n Pay and BP. Measured by the volume of groceries sold, Pick n Pay delivered its strongest six-month trade performance in five years, its interim results released on Tuesday morning claimed.

The group’s turnover for the 26 weeks to August 26 came to R41.2bn, a 6.4% growth from the first half of its previous financial year.

Its network of stores under its various brands totalled 1,732 at the end of the reporting period, indicating fairly conservative expansion. The group reported it had 1,685 stores at February 25, so it grew by a net 47 stores during the first half of its 2019 financial year.

Like-for-like turnover growth, which excludes new stores, was 3.8%. 

CEO Richard Brasher said the retailer held its internal inflation at 0.3%, far lower than the 3.5% food inflation reported by StatsSA in its consumer price index (CPI).

After-tax profit grew 20% to R489m, and diluted headline earnings per share (HEPS) by 17% to 98.38c.

Pick n Pay raised its interim dividend by 17% to 39.1c from 33.4c.

“There were clear market share gains over the period,” Brasher said in the results statement.

The group opened 60 new stores during the first 26 weeks of its 2019 financial year, with a focus on smaller neighbourhood convenience stores, standalone clothing stores and liquor stores.

It closed 13 underperforming stores during the period.

Much of Pick n Pay’s store expansion in the past few years has come from its alliance with fuel group BP whereby the retailer franchised Express-branded outlets on service station forecourts.

A change in Pick n Pay’s agreement with BP saw franchise fee income from Express stores fall 3% to R196m.

“The reduction in franchise fee income will be offset by a greater level of related volume through the Pick n Pay supply chain,” the results statement said.

Pick n Pay opened 14 new Express stores during the reporting period, bringing its footprint of garage forecourt stores in SA to 133.

Zimbabwean joint-venture TM Supermarkets delivered “outstanding performance”, offsetting problems in Zambia and other countries outside of SA.

“TM delivered turnover growth of 30.4% in local currency terms, anchored by improved stock availability and an effective promotional calendar. The group’s share of TM’s after-tax earnings grew 94.5% year on year,” the company said in the results statement.

Zambia, in contrast, suffered from “a tough trading environment, characterised by a constrained consumer, intense retail competition, import restrictions and selling price deflation across broad product categories”.

“The team in Zambia mitigated the impact of the difficult trading conditions through determined cost control and tight working capital management.”




Pin It

Related Articles

Clicks reports resilient first-half as earnings...

By Jacqueline Mackenzie - Business Live The group expects full-year Heps to increase by between 10% and 15%

Positive growth continues for The SPAR Group

SPAR Group turnover increased by 8.8% for the 24 weeks ended 15 March 2024, with a well-maintained policy of continued capital investment  across the wholesale and retail value chain.

Unaudited results for the 26 weeks ended 31 Dec...

Double-digit growth sees half year sales reaching R121 billion - Group sale of merchandise increased by 13.9% to R121.1 billion - Supermarkets RSA sale of merchandise increased by 14.6% to R97.5 billion - Diluted headline earnin...

Woolies online sales skyrocket — but still weak...

By: Staff Writer - MyBroadband South African fashion, home, and grocery retailer Woolworths saw online sales surge during the first half of its 2024 financial year. For the 26 weeks ending 24 December 2024, online sales in the fashion, beauty an...

Shoprite first-half sales rise 14%

By Andries Mahlangu - BusinessLive Africa’s biggest grocery retailer Shoprite reported robust growth in sales in the six months ended December, with all its various store formats coming to the party save for its furniture business.  It...