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Pick n Pay Stores Limited
Incorporated in the Republic of South Africa
Registration number: 1968/008034/06
JSE and A2X share code: PIK
ISIN code: ZAE000005443
("Pick n Pay")
Trading update for the 21 weeks ended 21 July 2024 and trading statement for the 26 weeks
ended 25 August 2024 (H1 FY25)
Trading update
Trading performance for the Company and its subsidiaries ("the Group") for the 21-week period to
21 July 2024 ("the Period") reflected another strong performance from the Boxer segment, while the
Pick n Pay segment's refreshed management team began to execute on the turnaround plan. Given
that the majority of the Pick n Pay segment's new management team has only been in place since
March 2024, the Group is encouraged by the initial progress made, while acknowledging the
magnitude of the multi-year journey to return this segment to profitability.
Sales update
Group sales for the Period increased 4.5% (3.7% like-for-like).
- Pick n Pay sales grew 0.1% (1.1% like-for-like), with Pick n Pay SA sales increasing 0.6% (1.7%
like-for-like). Pick n Pay sales lagged like-for-like sales due to the closure of net 16 supermarkets
during the Period (4 corporate stores and 12 franchise stores).
- Boxer sales grew 13.5% (9.2% like-for-like). Boxer's market leading sales performance was driven
by strong like-for-like performance complemented by new store openings.
Clothing sales growth in standalone stores (reported within the Pick n Pay segment) was 10.3%
(0.7% like-for-like), with like-for-like growth being impacted by the late arrival of winter weather as
well as port delays. Despite these challenges, Pick n Pay Clothing continued to gain market share
during the Period.
Online sales growth for the Period was 63.9%, sustaining the strong 74.4% online sales growth
momentum reported for FY24.
Group South African internal selling price inflation for the Period was 4.7%, reflecting a sharp decline
from the 7.3% reported for FY24 overall.
21 weeks ended 21 July 2024 % growth
Sales Like-for-Like sales
Pick n Pay sales (SA and Rest of Africa) 0.1% 1.1%
Pick n Pay SA sales 0.6% 1.7%
Boxer sales (SA and Rest of Africa) 13.5% 9.2%
Group turnover 4.5% 3.7%
Pick n Pay SA Supermarkets momentum
The key turnaround indicator the Group is targeting within the Pick n Pay SA segment is like-for-like
sales growth in PnP SA Supermarkets (excluding standalone clothing stores). The Group is seeing
steady improvement in this metric, from -0.4% in H2 FY24 to +2.0% for the Period.
26 weeks ended
25 February 2024 21 weeks ended
Like-for-Like sales growth H2 FY24 21 July 2024
PnP SA Supermarkets -0.4% 2.0%
PnP SA Company-owned Supermarkets -0.5% 3.6%
PnP SA Franchise Supermarkets -0.3% -0.8%
Note: PnP SA Supermarkets includes Hypermarkets and excludes standalone clothing stores.
Company-owned PnP SA Supermarkets (which account for the majority of reported Pick n Pay
segment sales) have significantly underperformed in recent years and are a key focus area of the
turnaround plan. As a result of improved retail disciplines, like-for-like sales for this segment
increased from -0.5% in H2 FY24 to 3.6% for the Period. The return of Pick n Pay Hypermarkets to
positive sales growth after a sustained period of underperformance is particularly noteworthy.
Against this, like-for-like sales momentum in SA Franchise Supermarkets was a disappointing -0.8%
across the Period. Company-owned Supermarkets have rarely outperformed Franchise
Supermarkets over recent years. While the Group views this trend reversal as further confirmation
of early progress in the turnaround of Company-owned Supermarkets, revitalising the performance
of the Franchise stores is a key current priority.
Trading statement
In terms of section 3.4(b) of the JSE Listing Requirements, the Group advises shareholders that it
expects earnings per share (EPS), headline earnings per share (HEPS), and comparable HEPS for H1
FY25 to decrease by more than 20% when compared to EPS, HEPS and comparable HEPS reported
for H1 FY24. This outcome is broadly in-line with the expectation communicated by CEO Sean
Summers at the FY24 results presentation in May 2024, in which he noted that the situation may
well get worse before it improves. The earnings guidance excludes the impact of hyperinflation
accounting for the Group's Zimbabwean associate, TM Supermarkets.
The Group expects H1 FY25 Boxer segment trading profit to show positive year-on-year growth, in-
line with expectations. H1 FY25 Pick n Pay segment trading profit is, however, expected to decline
year-on-year. The net result is that Group H1 FY25 trading profit is expected to decline year-on-year.
Key factors impacting Group H1 FY25 profitability include:
- Operating leverage: Group trading expense growth is under control as a result of the non-
recurrence of the R259 million H1 FY24 employee restructuring costs, and a significant reduction
in diesel costs to run generators, owing to the cessation of load shedding. However, H1 FY25
Group gross profit margin will show a year-on-year decline as a result of increased promotional
participation, with the diesel cost savings being reinvested into promotional activity in a highly
competitive market. The net result is that H1 FY25 Group trading expense growth is expected to
be slightly ahead of Group gross profit growth.
- Increased bank finance costs: Given increased pre-Rights Offer gearing and higher interest rates,
the H1 FY25 net bank finance charge is expected to be approximately R180 million higher than
H1 FY24. The Group forecasts a significant year-on-year interest charge reduction in H2 FY25 as a
result of progressing the two-step recapitalisation programme.
Management does not yet have the required degree of certainty to provide details of the anticipated
range for EPS and HEPS for H1 FY25. A further update to this trading statement will be provided once
the Group has the required degree of certainty to do so. The Group's H1 FY25 results are expected
to be released on SENS and ANS on or about 28 October 2024.
Despite the guided H1 FY25 year-on-year earnings decline, the Group continues to expect full year
FY25 profit/loss before tax and capital items to show a meaningful improvement on FY24. The full
year performance will be supported by: (a) Boxer trading profit growth; (b) expectations of a much-
reduced Pick n Pay segment full year trading loss; and (c) a reduction in H2 FY25 interest charges as a
result of the recapitalisation.
Balance Sheet update
Given the successful conclusion of the R4 billion rights offer in early August, the Group's balance
sheet is considerably strengthened. FY25 capital expenditure remains within expectations, and
inventory levels remain well managed, within both the Pick n Pay and Boxer segments. The focus is
now on the second step of the recapitalisation programme, with the planned IPO of the Boxer
business on track.
The financial information on which this trading update is based is the responsibility of the Board of
directors of the Group and has not been review by or reported on by the Group's external auditors.
By order of the Board
Cape Town
27 August 2024
Sponsor: Investec Bank Limited
Forward-looking information contained in this announcement
This announcement contains certain forward-looking statements which relate to the Group's
possible future actions, long-term strategy, performance, liquidity position and financial position. All
forward-looking statements are solely based on the views and considerations of the Board, and in
particular, as at the date hereof. These statements involve risk and uncertainty as they relate to
events and depend on circumstance that may or may not occur in the future. The Group does not
undertake to update or revise any of these forward-looking statements publicly, whether to reflect
new information, future events or otherwise. These forward-looking statements have not been
reviewed or reported on by the Group's external auditors.
Date: 27-08-2024 07:05:00
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