Pick n Pay has published its financial results for the year ended 28 February 2021.
The Group reported an outstanding performance in a year which fell almost entirely within the Covid-19 National State of Disaster.
The Group delivered market-leading sales growth of 10.0% in core food and groceries in South Africa, underpinned by sustained improvements across the Group’s customer offer.
Group earnings were impacted by trading restrictions on non-essential goods and services for parts of the year, which resulted in an estimated R4 billion in lost sales, and R200 million in additional costs related to the Group’s operational response to the Covid-19 pandemic.
Despite the impact of lost sales as a result of trading restrictions, Group earnings, on a comparable basis and excluding once-off costs, were down only 6.1% year-on-year. This is an outstanding performance in unprecedented circumstances, demonstrating the underlying strength of the Group.
Gross profit increased 4.7% to R18.4 billion, with the gross profit margin rising to 19.8% of turnover. The Group offset the impact of Covid-19 trading restrictions by delivering efficiency gains and cost savings across its supply chain – while providing greater value for customers.
Project Future, launched a year ago to drive modernisation and efficiency, enabled the Group to invest in lower prices, better value and improved service for customers. The Group delivered R600 million of cost savings in the first year of Project Future, and is on-track to deliver the target of R1 billion over two years.
- Market-leading core food and grocery performance in South Africa, up 10.0% year-on-year (8.4% like-for-like) with 5.1% like-for-like volume growth in the second half of the year
- Market share gains led by an outstanding Boxer performance
- Competitive prices and value, with internal selling price inflation kept to 3.8% over the year against CPI Food of 4.8%, driven by strong promotions and a highly-integrated Smart Shopper loyalty programme
- Improved trading densities delivered through tighter and more tailored ranges
- 112 new stores across all Pick n Pay and Boxer formats; smaller stores providing convenience and value. Group now has 1,994 stores across all Pick n Pay and Boxer formats.
- Market share gains for Pick n Pay Clothing
- Rapid expansion of South Africa’s largest online grocery platform – acquisition of Bottles on-demand app complements scheduled delivery and Click n Collect services
- Smart Shopper now has 8.5 million active members, with loyalty participation growing to a new record of 75% of sales. Smart Shopper was recognised by the Sunday Times as South Africa’s favourite retail loyalty programme of the past decade
- Project Future driving a culture of cost discipline, with growth in like-for-like trading expenses contained at 5.6% (3.1% like-for-like), excluding additional Covid-19 costs and once-off compensation costs
- Resilient store and supply chain infrastructure, maintaining continuity and high levels of product availability throughout Covid-19
- Gross profit margin expansion, with cost savings and efficiency gains across the supply chain countering the impact of trading restrictions on the Group’s higher-margin categories
- Positive net cash position of R132.5 million, R500 million stronger than last year on a like-for-like basis, underpinned by strong working capital management
- Feed the Nation campaign raised R136 million in hunger relief efforts over the year, providing 28 million meals to the most vulnerable families across the communities we serve
Group operations outside South Africa mitigated the impact of Covid-19 measures with exceptional cost discipline and working capital management. The Group’s franchise operations remained resilient across Namibia, Botswana, eSwatini and Lesotho. The Group’s Rest of Africa division delivered profit before tax of R148.1 million before the application of hyperinflation accounting, up R58.0 million on last year. This result was underpinned by the underlying resilience of TM Supermarkets in Zimbabwe.
Commenting on the result, CEO Richard Brasher said:
“I am very proud of this performance. Our market leading sales growth in a difficult environment shows how we have kept our focus on our customers in the most challenging of times.
“Once the impact of once-off costs is taken into account, our earnings performance was exceptional despite all the challenges and disruption of this extraordinary year.
“Customers are having a really difficult time. We responded by launching Project Future to modernise our ways of working and reduce our costs, so we can give more back to customers in lower prices. I am pleased that, as a result, we kept our price inflation below CPI food for another year. Both Pick n Pay and Boxer have focused on great value promotions on the items that are most important to our customers, and they responded very well.
“Many parts of our business have performed exceptionally well over the past year. Boxer is cementing its position as the premier food and grocery discounter in Africa. Our great value clothing business outperformed the market. The benefits of our Smart Shopper loyalty programme were embraced by more customers.
“Our online business responded extremely well to cater for customers in the lockdown, doubling scheduled deliveries and click n collect orders. I want to thank our franchisees in particular for their extraordinary response during Covid-19, typified by how they expanded their own click n collect services for customers in very difficult times.
“We are now going to integrate our various online channels by launching PicknPay.com. Customers will in future be able to shop seamlessly with Pick n Pay anytime, anywhere and in whichever way they choose.
“This is my last set of results before I retire. It has been a real privilege to lead the Group for the past eight years. My legacy is to leave the business stronger than I found it – equipped to win in the years to come. I want to thank the Chairman, the Ackerman family and the Board for their unstinting support.
“Most of all I want to thank my thousands of colleagues for walking every step of the way with me.”
“My very best wishes to Pieter Boone, who takes over from me today. He is an exceptional retailer and well positioned to take the company into the future with confidence.”