SOUTH AFRICA – South African retail giant, Pick n Pay, has released its financial results for the 26 weeks ending on August 27, 2023 highlighting both challenges and positive developments.
The group faced a particularly challenging period during the covered timeframe, resulting in disappointing financial results.
Several factors contributed to these challenges, including high load shedding costs and intensified competition in the retail sector.
The Group’s expenses increased significantly, driven in part by expenditures of just under R400 million on diesel. This cost added to overall expense growth and limited the company’s ability to respond to aggressive competitor promotions.
Despite these challenges, the Group achieved a 5.4% growth in turnover, with like-for-like growth at 2.3%. Boxer, a subsidiary of Pick n Pay, delivered an exceptional performance, growing by 16.1%.
However, the gross profit margin decreased by 0.9% to 18.5%, and trading expenses increased by 13.7%. These expenses included R190 million in net incremental energy costs and R259 million in employee restructuring costs.
Excluding these items, underlying trading expense growth was 9.1%.
Trading profit amounted to R31.8 million but could have been significantly higher, reaching R597 million if not for R565 million in incremental abnormal costs, including energy costs and employee restructuring expenses.
The Group’s profit before tax was further impacted by a 47.3% increase in net finance charges, resulting in a pro forma loss before tax and capital items of R837.2 million.
New CEO to lead turnaround amid challenges
Due to the Group’s disappointing performance, a change in leadership was announced earlier this month.
Sean Summers was appointed as the new CEO, effective September 30, 2023. Summers previously led the company from 1999 to 2007 and returned to steer the company in a challenging environment.
“My focus is to return the core supermarkets business to growth and profitability, and maintain the growth of other key parts of the business,” Summers stated.
“We have a lot of work to do, and I have received strong support from our people. They want to see Pick n Pay succeed, and my task will be to see that we work hard on the basics and improve significantly both on customer service and on execution in our supermarkets.”
Summers emphasized the importance of working closely with suppliers, improving buying capabilities, and rekindling customer loyalty to the Pick n Pay brand.
Earlier this year, the Group also expanded its presence in the Rest of Africa segment and acquired Tomis, an abattoir and meat packaging business, to enhance its fresh meat offerings.
Pick n Pay’s energy-saving initiatives and modernization of its franchise model contributed to cost savings and improved operational efficiency.
