Food retailer Pick ‘n Pay has reported double-digit growth since implementing a new strategy for their stores. The company released its interim results earlier on Tuesday for 26 weeks ending August 28.
However, the Group says it faced numerous challenges, including increased insurance and security costs due to last year’s July unrest. It is also navigating higher input costs from fuel prices, battling inflationary pressures, and dealing with rolling blackouts.
Pick ‘n Pay spent R110 million on energy costs during the reported period due to increased rolling blackouts. Although the Group’s turnover rose 11.5% to R51.3 billion, trading costs rose by 10.6%, due to external expenses and planned investment in delivering their Ekuseni strategy.
“This half-year result was delivered against the backdrop of externally driven cost pressures, the most significant of these were and are high diesel cost to mitigate heavy load shedding, above-inflation increases in areas such as fuel, rates, and electricity, security, and insurance costs which have significantly increased since the July riots last year, as well as an increase of 150 basis points in the repo rate until the end of August,” says Pick ‘n Pay CFO Lerena Olivier.
Chief Executive Officer Pieter Boone says there has been good momentum in trading across the entire group.
“Our growth was solid in the first quarter and we had a very strong quarter sales growth of 14. 2 %. There was disruption last year due to the July civil unrest, nevertheless even accounting for that impact our sales growth was encouraging and we have strong trading momentum across the group.”
New strategy
The company this year split its main brand into QaliSave for lower to middle-income customers and Boxer for middle to lower-income consumers. The Pick ‘n Pay brand focuses on middle to high-income customers.
The Group says its new Ekuseni strategy has been positive. Its Boxer sales growth was a clear driver for the company’s turnover. It plans to roll out this new strategy over the next four financial years. It also plans to double its Boxer stores over the next few years.
“Boxer has delivered market-leading sales growth of 27.2%, 14.2% on a like-to-like basis. The Boxer performance is representing 30 % of the total South African sales. A number of Pick ‘n Pay stores were converted to Boxers over the last 12 months.”
The group aims to build a market-leading online business. It opened 134 new stores under its new banners. Pick ‘n Pay delivered strong growth in its African key markets and invested in 79 new stores.
