SOUTH AFRICA – South African retailer, Pick n Pay has flagged double-digit sales and earnings growth supported by a strong performance from its value brand Boxer and higher prices.
According to the supermarket chain owner, it expects sales growth of 11.5% for the 26 weeks ended 28 August, with like-for-like sales up some 7.4%.
It is important to note that the base period (H1 FY22) was severely disrupted by the July 2021 civil unrest and the loss of 55 days of liquor trading due to Covid-19 trading restrictions.
Excluding these impacts, the Group estimates normalised sales growth for the period of 8.2%.
Meanwhile its Headline earnings are expected to be 20 to 30% higher during the period under review.
The soaring sales and profit growth is attributed to recent price hikes with the group’s internal selling price inflation for the period reaching 7.2%, “reflecting a sharp uptick over July and August” compared to the 5% reported for the first 18 weeks of the financial period.
Despite the sharp increase in prices, Pick n Pay tried to shield consumers from biting food inflation as its price hike was below the official consumer price inflation which was 11.3% in August from 8.6% in June.
“We reiterate our ongoing commitment to low-price investment and collaboration with suppliers to limit price increases,” the retail group said.
In addition to rise in prices, the sales growth was also driven by a strong performance from Boxer, with the company saying the year-on-year sales growth from the Pick n Pay supermarkets upgraded to new “customer value propositions” had been “particularly encouraging”.
However, the company said the upgraded stores “do not yet constitute a substantial enough proportion of the estate to meaningfully impact the overall performance of the Pick n Pay brand”.
The retailer earlier this year split its core Pick n Pay offering into two distinct brands as it looks to make further inroads to the discount, convenience, and premium market segments.
After the split Pick n Pay serves higher-income customers, while Pick n Pay QualiSave focuses on customers in the growing middle market.
Its Boxer brand continues to serve customers in the lower to middle income segments.
Other than reformatting its stores, Pick n Pay has launched its premium house brand, Crafted Collection, aimed to deliver a unique foodie experience to customers, the range has elevated much-loved products into high premium.
Some of these include a Fynbos Flavoured Extra Virgin Olive Oil, Chai, a Smoky Tomato Ketchup and a wide range of Exotic Mushrooms, offering customers quality for less.
Indulgence is another strong focus of the offering with its range of crafted chocolates, biscuits, shortbread and hot chocolate.
This is tapping into the ‘spoiling myself’ trend which has strongly emerged post-Covid. Customers are increasingly looking to treat themselves to food indulgence that doesn’t break the budget.