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Pick n Pay says profits rose by a fifth thanks to SA business and better prices




Pick n Pay Stores says net profit rose by about a fifth in the financial year to March 3, even as its operations outside SA stumbled.


Nick Hedley | Business Live

“The group’s improved performance is anchored by strong performances from its stores serving the growing lower to middle income communities of SA, a more competitive price position and a substantively improved fresh offer,” it said.

Profit after tax was R1.65bn in the 53-week period, versus R1.3bn in the prior 52-weeks. On a pro-forma basis, net profit was up 19.9% as turnover grew 7.1% and margins improved.

A final dividend of 192c a share brings the total annual dividend to 231.1c per share, a 22.4% increase.

Despite the upbeat financial report, Pick n Pay’s shares were 2.8% lower at R69.74 at 10.25am on Friday.

The group, led by former Tesco UK boss Richard Brasher since 2013, said the performance of the SA business – which trades under the Pick n Pay and Boxer brands – “mitigated some operating challenges experienced outside its borders”.

In its home market, turnover grew 7.4% and profit before tax was up 23.8%. 

But earnings from the rest of Africa fell 16.2%, “reflecting difficult economic conditions in Zambia and the once-off impact of currency devaluation in Zimbabwe”.

Thanks in part to promotions, Pick n Pay said selling prices were reduced by 0.3% in the year, while group-wide volume growth of 5.1% “represented its strongest underlying trading performance for many years”.

“Market-leading turnover growth was achieved without sacrificing earnings growth,” it said.

The group added 110 net new stores in the period, while 103 stores were refurbished.

Value-added-services income, including from the group’s partnership with TymeBank, was up 41.5%.

Meanwhile, Pick n Pay said it had started building a store in Nigeria, which would open in 2019, and it planned to open two more in that market.

“Over the past six years we have changed the trajectory of Pick n Pay,” Brasher said. “This has been a very good year.”

He said Pick n Pay would invest R2bn in the business in the financial year ahead, compared to R1.5bn in the 53 weeks to March 3.

It planned to invest behind the Boxer business – which “can easily double in size” – in store refurbishments, and in the Pick n Pay Express chain.

While the group would probably open more than 100 stores in the coming year, the industry’s store-growth race “has moderated”.

Brasher said the grocery industry in SA was not yet efficient enough and food prices remained too high.





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