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Pick n Pay has released its interim results for the six months ended August 2020, showing a 52% drop in earnings per share, as the group’s sales and earnings were inevitably negatively affected by Covid-19 and the measures taken by governments to contain it.
Comparable HEPS of 37.12 cents, decreased 56.3% to 85.03 cents a share.
Business restrictions affected up to 20% of the group’s revenue at different stages of the national shutdown, and sales were further affected by reduced business hours, limits on the number of customers in stores, and temporary closures of shops.
These restrictions resulted in an estimated loss of sales of R2.8 billion during the period.
In this context, the group’s turnover increased 2.6% year-on-year, with a comparative growth of 1.0%. The turnover of the South African operations increased 3.4%, with a comparative growth of 1.7%.
Food, groceries and merchandise in general (excluding spirits, clothing and tobacco) grew 8.7% year-on-year (6.4% like for like), with a growth of 9.9% in South Africa (7.6% like for like ). Top food and grocery sales in South Africa grew 4.2% by volume, the retailer said.
Pick n Pay declared an interim dividend per share of 18.74 cents, 56.2% less than the previous 42.80 cents.
The group’s profits were affected by additional measures taken to protect staff and customers during the closing, resulting in R150 million in additional operating costs.
Gross profit increased 1.0% to R8.6 billion, with a 0.2% reduction in gross profit margin to 19.6% of turnover. This reflected the impact of trade restrictions on a number of higher margin categories, mitigated by efficiency savings and progress in centralization in the group’s supply chain.
Pick n Pay noted strong market share gains in key clothing categories and the launch of the group’s online clothing platform during the period, while 42 new stores were opened despite the disruption of the closure, leading to its presence in 1,945 stores.
Participation in Smart Shopper loyalty represented up to 70% of sales, with seven million active customers.
CEO Richard Brasher said: “Although the pandemic inevitably affected our sales and profits, we have had a resilient result, with many reasons to be positive about the future.”
“Clients went through a very difficult six months, with unemployment reaching record levels and many families suffering sharp drops in income. We responded by further adjusting our costs, investing R500 million in price on everyday essentials, deepening our promotions, and providing even better deals to savvy shoppers.
“Our domestic inflation remained below the food CPI, and our investment generated market share gains in the grocery, perishable and fresh categories.”
Looking ahead, Brasher said: “Project Future has positioned us very well for a better future, with savings for the next two years set at R1 billion. We are a more agile, innovative, productive, efficient company that faces the future with confidence ”.
Read: Pick n Pay Buys Bottles – An Online Grocery Service
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