JSE-listed food retailer Pick n Pay has delivered a disappointing set of financials for the six months ending August 2023, and it is blaming elevated load-shedding costs for constraining its ability to compete with its peers.

On Wednesday, the retailer reported a 97.5% loss in trading profit for the 26-week period, coming in at R31.8 million compared to R 1.253 billion in the comparable 2022 period.

Pick n Pay says its performance would have come in much stronger had it not had to foot a R396 million bill for diesel to operate generators during load shedding and sustain R596.8 million in incremental abnormal costs, including: “R259 million employee restructuring costs, R190 million net incremental energy costs, and R116 million of duplicated supply chain costs from the Eastport distribution centre transition”.

The group’s already under pressure share price plunged over 13% on Wednesday morning, following the release of its latest results.
It traded around R25.77 a share just after 10.30am on the JSE.

Pick n Pay reported a 13.7% increase in trading expenses, to R11.2 billion from R9.8 billion, reducing the trading profit margin to 0.1% from 2.4% last year.

A pro forma headline loss per share of 129.20 cents was reported for the period, falling from the 88.76 cents Heps reported last year. The loss aligns with the retailer’s guidance in a previous trading update.

The half-year loss means no interim dividend will be declared for the period.

Group turnover grew 5.4% (2.3% like-for-like) to R54.1 billion compared to R51.3 billion in the last comparable period. Turnover growth was reportedly boosted by a strong performance in Boxer stores, which reported 16.1% growth.

New leadership

The retailer is hoping to change its fortunes with a switch in leadership. The group recently reappointed Sean Summers as CEO, kicking Pieter Boone to the curb.

Summers, who steered the ship through its heydays between 1996 and 2006, officially took office at the end of September. According to the retailer, Summers’s main priority will be to recreate his success, including returning core Pick n Pay stores to growth and profitability.

“While doing so, he will ensure that the group’s key growth drivers of Online, Boxer and Clothing continue to deliver on their accelerated growth objectives. Given that Mr Summers stayed in close touch with the group before his appointment, he will hit the ground running and make an immediate impact,” Pick n Pay said.

In a results-linked statement on Wednesday, Summers highlighted being up to the task, declaring: “We have a lot of work to do.”
“I have received strong support from our people. They want to see Pick n Pay succeed, and my task will be to see that we work hard on the basics and improve significantly both on customer service and on execution in our supermarkets.”

“Our buying capabilities need work, and we will be engaging closely with our suppliers as a matter of urgency. Importantly, we need to rekindle customers’ affection for the Pick n Pay brand and energise our staff to focus their efforts on the critical road ahead,” he added.

Recognising Boone’s contribution 

Group chair Gareth Ackerman, in what seems like the first time he’s affectionately acknowledged Boone’s contribution to the group since the announcement of Summer’s takeover, thanked him for his service but added that, unfortunately, the country’s ongoing power crisis had “taken the gloss off” of Boone’s achievements.

“But [the group] can be proud of the way [it has] delivered in most of our defined strategic pillars,” Ackerman added.