Pick n Pay said in a trading update for the 21 weeks ended 21 July 2024, that like-for-like sales lagged due to the closure of net 16 supermarkets during the period.
The group’s performance showcased a robust performance from the Boxer segment, while the Pick n Pay segment’s new management team began implementing their turnaround strategy.
Despite the new management team being in place only since March 2024, the group said it is optimistic about the initial progress, acknowledging the long journey ahead to restore profitability.
Group sales for the period increased by 4.5% (3.7% like-for-like):
Pick n Pay sales grew by 0.1% (1.1% like-for-like), with Pick n Pay SA sales increasing by 0.6% (1.7% like-for-like).
The closure of 16 supermarkets (4 corporate and 12 franchise) impacted Pick n Pay’s like-for-like sales.
Boxer sales surged by 13.5% (9.2% like-for-like), driven by strong performance and new store openings.
Clothing sales in standalone stores (within the Pick n Pay segment) grew by 10.3% (0.7% like-for-like), despite challenges like late winter weather and port delays.
Online sales growth was impressive at 63.9%, maintaining the strong momentum from FY24. Group South African internal selling price inflation for the period was 4.7%, down from 7.3% in FY24.
The group is targeting like-for-like sales growth in Pick n Pay SA Supermarkets (excluding standalone clothing stores) as a key turnaround indicator. Improvement was seen from -0.4% in H2 FY24 to +2.0% for the period.
Company-owned Pick n Pay SA Supermarkets, which have underperformed in recent years, showed a like-for-like sales increase from -0.5% in H2 FY24 to 3.6% for the period.
Pick n Pay Hypermarkets returned to positive sales growth after a period of underperformance. However, like-for-like sales in SA Franchise Supermarkets were disappointing at -0.8%.
Trading Statement
The group said it expects EPS, HEPS, and comparable HEPS for H1 FY25 to decrease by more than 20% compared to H1 FY24. This aligns with CEO Sean Summers’ earlier warning that the situation might worsen before improving.
The earnings guidance excludes the impact of hyperinflation accounting for the Group’s Zimbabwean associate, TM Supermarkets.
The group anticipates positive year-on-year growth in Boxer segment trading profit for H1 FY25, while Pick n Pay segment trading profit is expected to decline.
Consequently, Group H1 FY25 trading profit is expected to decline year-on-year.
Despite the anticipated earnings decline for H1 FY25, Pick n Pay expects a meaningful improvement in full-year FY25 profit/loss before tax and capital items, supported by Boxer trading profit growth, a reduced Pick n Pay segment trading loss, and lower H2 FY25 interest charges.
Following the successful R4 billion rights offer in early August, the group’s balance sheet is significantly strengthened. FY25 capital expenditure remains within expectations, and inventory levels are well managed in both the Pick n Pay and Boxer segments.
The focus now shifts to the second step of the recapitalisation programme, with the planned IPO of the Boxer business on track.
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