Pick n Pay Group's trading performance for the 26-week period ending 25 August 2024 showed varied results across its segments.
The Boxer segment continued its strong growth trajectory, while the Pick n Pay segment began executing its turnaround plan under refreshed management.
The Group said it has made significant progress in its two-step recapitalisation plan, with a successful rights offer completed in August 2024.
It also gained overwhelming shareholder support at its 1 October general meeting to proceed with listing Boxer on the JSE Main Board by the end of the year.
Overall, Group sales for the period grew by 3.7%, with like-for-like growth at 2.9%. However, the Pick n Pay segment reported a decline in sales, impacted by store closures during the period.
Store Closures Hit Pick n Pay Sales
Pick n Pay's total sales fell by 0.3%, though like-for-like sales rose by 0.5%. In South Africa, Pick n Pay's sales remained flat, growing just 0.1%, with like-for-like growth of 1.1%.
However, these numbers were weighed down by the closure of 24 supermarkets during the period—10 corporate-owned stores and 14 franchise stores—leading to an overall decline in Pick n Pay’s sales performance.
In contrast, Boxer continued to thrive, reporting a 12.0% increase in sales (7.7% like-for-like). This growth was driven by strong like-for-like sales and the opening of 12 new stores. Boxer is expected to further boost its full-year sales with additional store openings in the second half of the year.
Clothing and Online Segments Show Strength
Pick n Pay Clothing showed resilience with a sales increase of 9.8%, although like-for-like sales were only up by 0.2%, impacted by the late arrival of winter weather and port delays.
Despite these challenges, the clothing division continued to gain market share.
The Group's online sales experienced significant growth, up 60.6%, building on the strong 74.4% growth recorded in FY2024.
Inflation and Sales Momentum
The Group reported a decline in internal selling price inflation for the period, falling to 4.3% from the 7.3% inflation reported for FY2024.
However, sales momentum across both the Pick n Pay and Boxer segments slowed in August, resulting in slightly lower turnover growth for the full 26-week period compared to the previous 21 weeks.
The Group remains focused on its turnaround plan, particularly for Pick n Pay SA Supermarkets, which showed an improvement in like-for-like sales, growing from -0.4% in H2 FY24 to +1.3% during the period.
Company-owned Pick n Pay Supermarkets also showed progress, with like-for-like sales up 3.1%.
However, franchise stores underperformed, with a -1.4% like-for-like sales decline, highlighting a key focus area for management moving forward.
Outlook and Earnings Guidance
In an earlier trading statement, the Group advised that earnings per share (EPS), headline earnings per share (HEPS), and comparable HEPS for the first half of FY2025 would decrease by more than 20% compared to the previous year.
The Group now expects EPS to decline by 30-40%, with HEPS down by 10-20%.
Despite the expected decline in earnings for the first half of the year, the Group remains optimistic about the full-year performance, forecasting a significant improvement over FY2024. This will be supported by Boxer's ongoing profitability, a reduction in Pick n Pay’s full-year trading loss, and lower interest charges following the recapitalisation.
The Group plans to release its H1 FY2025 results on 28 October 2024, accompanied by a strategy presentation outlining the next steps in its turnaround journey.
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