Pick n Pay strutted its stuff as it said in a trading update for the 18 weeks ended July 3 that group sales had increased 10.7 percent.
This as it said it was up to the challenge of rising inflation and intended to maintain its growth momentum under its new Ekuseni customer value proposition.
In May, group CEO Pieter Boone unveiled a new four-year strategic pan as its “biggest and most important change in Pick n Pay for many years” with the goal to deliver group turnover growth at a compound annual rate of 10 percent, resulting in market share growth for the group of at least 3 percent.
Gareth Ackerman, the chairperson of the group, said: “Pick n Pay has performed admirably this past year, in a very demanding environment. This coming year will be a very exciting one for us as we continue the process of implementing our strategy and bringing a new experience to our customers – wherever they are. Through all this change, the one thing that will not change is our values. They have served us well for 55 years. They will endure.“
The group’s South Africa segment grew sales by 10.5 percent, with like-for-like sales growth of 8.3 percent. South African internal selling price inflation for the period was restricted to 5 percent, below 7.1 percent CPI Food. Its Rest of Africa segment revenue increased by 18.9 percent and by 9.5 percent on a constant currency basis.
Group liquor sales for the period increased 17.2 percent year-on-year, supported by the annualisation of a full liquor lockdown in week 18 of the base period. Liquor sales growth for the first 17 weeks of full year 2023, at 9.6 percent, provided a better indication of the underlying liquor sales trend, the retailer said.
The clothing division delivered another strong performance, with sales increasing 17.1 percent on a year-on-year basis.
Total online sales for the period, including scheduled delivery, click and collect, and asap!, Pick n Pay’s on-demand online service, grew 97.3 percent.
Boxer segmental sales would be disclosed going forward, starting with the interim full year 2023 result, the group said.
Pick n Pay said that it had upgraded 10 stores to the new Ekuseni customer value proposition (CVP). It aimed to have 40 stores upgraded to the new CVP by the end of the first half full year 2023 and 150 by February 2023.
The acceleration of its Boxer and Clothing store opening plans was proceeding well, it said. Pick n Pay Clothing had 73 new store openings confirmed for full year 2023, while Boxer was on track for 61 full year 2023 new store openings.
“Boxer continues to grow ahead of the market and is progressing well on its plan to double sales” by the end of full year 2026.
It said the launch of a dedicated Pick n Pay food and grocery offer on the Mr D app was on track. The initial launch would be in a limited number of stores in August, with national coverage targeted by the end of full year 2023.
Pick n Pay said the group was making good progress on its target to improve efficiency and reduce costs by R3 billion over the next three years. It will close its Kensington campus in Johannesburg by December 2023 as part of its move to a more flexible and cost-effective support office. Pick n Pay’s new Eastport DC was on track to open in March 2023.
But Pick n Pay flagged that it was experiencing significant operating cost pressures in the current financial year. These include material increases in rates, electricity, utility and fuel costs.
The July 2021 riots had also resulted in very significant increases in the cost of insurance and security.
“As previously announced, the implementation of the group’s Ekuseni strategic plan also gives rise to additional costs in the current financial year – to fund the acceleration of our Boxer and Clothing store roll-outs, and store upgrades as Pick n Pay implements its new CVP,” it said.
Looking ahead, Pick n Pay said its sales growth in July was accelerating as it annualises last year’s civil unrest and restrictions on liquor sales in July 2021.
It expected the consumer environment to remain challenging, as a result of globally rising inflation and interest rates, and the ongoing impact of severe load shedding locally.
“Despite this, the group remains confident that it has the right Ekuseni strategic plan, with its emphasis on delivering greater efficiency and growth focused on areas of the market where consumers are seeking unbeatable value. We are confident our Ekuseni initiatives will continue to drive sales momentum this year,” the retailer said.
Shares in Pick n Pay were up 3.27 percent to R58.73 in midday trade, having fallen 11.22 percent in the past three years.
BUSINESS REPORT