Pick n Pay today published its annual results for the year ended 1 March 2020. The Group delivered turnover growth of 4.7% in a tough trading environment. The Group’s South African operations delivered turnover growth of 5.1% against a strong prior year base, reflecting operational challenges in the second half of the year including the impact of a sustained programme of load-shedding and some supply chain labour disruption. 

The Group’s South African operations remained resilient, delivering growth in Comparable Profit before Tax (PBT) of 15.2% for the year, offsetting challenges experienced in Zimbabwe and Zambia. Group PBT was up 6.5%, with the PBT margin improving from 2.0% to 2.1%. Comparable Headline Earnings per Share of 278.8 cents per share is line with last year on a 52-week basis.

Highlights included:

·         Lower prices and greater value for customers through competitive pricing and strong promotions

·         Internal inflation kept to 2.6%, against CPI Food of 3.6% supported by greater cost control

·         Stronger performances from Pick n Pay Value and Boxer stores which are giving exceptional value to lower-income customers, and sustained growth across clothing and liquor businesses

·         Strong growth in Boxer lifts its market share in a number of product categories to over 15%

·         130 new net stores added 3.2% to turnover growth

·         Greater relevance in customer offer, and enhanced fresh quality, including the launch or upgrade of 1,500 own brand products

·         Gross profit margin up by 0.6% points to 19.7% assisted by supply chain efficiency

·         Centralised distribution in PnP close to 80%, with Boxer at 45%

·         Growth in trading expenses restricted to 6.3% year-on year, and 2.9% in H2

·         Smart Shopper voted SA’s best loyalty programme for 7^th consecutive year, with over R4-billion in personalised vouchers issued to loyalty customers this year

·         Value added services income up 14.2%

·         First retailer in SA to offer deposits at till points through partnerships including TymeBank, FNB, Investec and Discovery

·         8,000 insurance policies sold in partnership with Hollard

·         4.6 million domestic and cross-border money transfers

·         Africa operations remain profitable, before the impact of hyperinflation, but trade across exceedingly difficult environments

·         SA EBITDA up 8.4% to R5.9bn, with EBITDA margin growth of 0.3% points

·         Group EBITDA up 7.2% to R6.1bn, with margin improvement of 0.2% points

The Group’s careful approach to growth in the rest of Africa has helped to mitigate the impact of challenges in Zambia and Zimbabwe. The Africa division contributed R4.7 billion of segmental revenue, down 1.7% on last year. Removing the impact of currency weakness, segmental revenue was up 2.8% in constant currency terms. The division delivered comparable net profit before tax, excluding the impact of hyperinflation in Zimbabwe, of R90.1 million, down 57.3% year-on-year.

The Group took the opportunity to update shareholders on its response to the COVID-19 pandemic, its role as an essential service helping to feed the nation, current trading conditions, and its determination to make further progress on its long-term plan despite the many uncertainties in the current crisis. 

Commenting on the result and the current situation, CEO Richard Brasher said:
 
“I am pleased with the performance of the Pick n Pay and Boxer teams in a very difficult trading environment, and against a strong base last year. 

“We have delivered seven successive years of sales and PBT growth - a record of consistent progress that few others can match in tough times.  We have done this by building a better business - having the right plan and implementing it steadily over a number of years.  Each reporting period we have been able to report on how we have become more relevant, more innovative, more consistent, more modern and more reliable, while providing better value for customers. 

“This progress means that we are well-prepared for the exceptionally difficult challenges that we are all currently facing with the COVID-19 pandemic. 

“I am proud of the work that Pick n Pay and Boxer are doing as one of the essential services.  We are helping to feed the nation by staying open, staying safe and staying full.

“I am really impressed by the way our team has responded – particularly our colleagues on the front line in our Pick n Pay and Boxer stores.  They have worked tirelessly, with real urgency and determination, to put in place new health and hygiene measures to protect staff and customers, and to keep our shelves stocked at a time when customers have depended on us more than ever.

“Our colleagues have risen to the challenge, many overcoming significant obstacles to get to and from work to keep South Africans fed in the crisis. They deserve our thanks and appreciation, and I am very pleased that we have been able to give front-line colleagues an appreciation bonus at the end of April and May.

“We are also very proud of our response to those most in need through our Feed the Nation programme, which has already delivered over 5.0 million meals to some of our most vulnerable people.”

Commenting on the current year, the Group said that earnings were currently impacted as a result of the mitigation measures taken by the government to combat COVID-19, including the current inability to trade in liquor, tobacco and some other categories.  However, the many current and future uncertainties arising from the pandemic mean that it is simply not possible at this stage to estimate or quantify the likely impact over the full financial year.   The Group assured shareholders that it was well positioned for the crisis, with stable funding and the required liquidity.

Richard Brasher concluded:

“Together with my team, I am rolling up my sleeves for the biggest challenge any of us has experienced in our careers.  We are approaching it with strength and energy.  As well as being there for our customers, we will use the time to make our business fit for the world after Coronavirus.

“Despite the uncertainties, I am certain we will succeed.  We can look forward to better days.  When we reach those better days, I want us to look back with pride.  We will remember not just the size of the challenge, but how we stepped up, gave our very best, and won through in the end.”