Pick n Pay posts strong double-digit HY profit growth


Cape Town-headquartered grocery, liquor, general merchandise and clothing retail group Pick n Pay Stores Limited has delivered a strong half-year performance for the period ending 28 August 2022, upping headline earnings per share by double digits in an increasingly competitive market.

Pick n Pay posted a 25.3% increase in interim headline earnings per share (Heps) on a pro forma basis, which came in at 88.76 cents compared to 70.85c for the corresponding half-year.

Group turnover also grew by double digits at 11.5%, up from R46 billion to R51.3 billion.

The better performance saw the retail giant increasing its interim dividend per share by 25.3% – from 35.8c to 44.85c. It also shows that Pick n Pay’s investments into growth, through its Ekuseni strategic plan, is already starting to pay off.

“Group turnover was up 11.5% year-on-year. Even when normalising for disruptions in the base period – due to the civil unrest, and Covid-19 liquor restrictions last year – Group turnover increased by an encouraging 8.2%,” it adds.

Profit margins

Pick n Pay increased its profit margin from 18.2% to 19.4%, however, trading expenses also increased – up from R8.9 billion to R9.8 billion.

“The gross profit margin in the base period was depressed by the cost and disruption of the July 2021 riots. Taking this into account, the gross profit margin contracted on a normalised basis by 0.6% points – reflecting planned investments in lower prices, and significant increases in energy costs,” the group says.

“Pro forma profit before tax in South Africa increased 17.1%, despite increased insurance and security costs following the July 2021 riots, inflationary pressures, and planned costs associated with implementing the Ekuseni plan,” it adds.

The group has for the first time segmented the sales growth achieved by Boxer and by Pick n Pay respectively in South Africa. Boxer stores target the lower end of the retail market.

“This underlines Boxer’s position as a consumer champion among lower-income customers in search of unbeatable value and service. The Group is on track to double Boxer sales over the four years of its Ekuseni plan.”

Pick n Pay South Africa (Pick n Pay and QualiSave banners) grew sales 5.4% to R34.5billion. “This was a respectable performance in a tough market,” says the group. Commenting on the results, Pick n Pay CEO Pieter Boone says he is very pleased with the progress achieved across Pick n Pay and Boxer over the past six months.

“We have unveiled a totally new retail banner in Pick n Pay QualiSave – dedicated to customers who want Pick n Pay quality at exceptional prices. We are rejuvenating our Pick n Pay stores at pace, and the sales growth and customer feedback in these stores is very encouraging,” he says.

Share price slide

Pick n Pay’s share price saw a slide of more than 8%, trading around 59.04 a share after 13h00 on Tuesday, following the release of its interim results. Worth noting is that the stock gained over 5% last week, after the group posted a trading update for the half-year period. 

It remains to be seen if this is linked to profit-taking or the market’s response to details revealed in the group’s results presentation which took place at 9h00.