Food retailer Pick ‘n Pay’s share price has dropped almost 14 percent after delivering its financials on Wednesday morning.
The JSE listed company delivered disappointing half year results, with its gross profit margins down almost 20 percent, trading profit declining almost 100 percent, while total expenses jumped almost 10 percent.
Its turnover was slightly up over 5 percent, largely attributed to its Boxer stores, which expanded by 27 stores and Pick ‘n Pay Clothing growing by 20 stores.
The food retailer did not declare any dividends. The tough economic conditions and low consumer confidence and spending have all affected many food retailers and Pick n Pay was not spared from the bloodbath.
Pick ‘n Pay Chairman Gareth Ackerman says, “The six months from March to August were among the most difficult South African consumers have had to endure in recent years. Load shedding reached its worst level since we first experienced it in 2008. This has had a disproportionately negative impact on the retail industry. Food inflation topped 14 percent in March, its highest level in 14 years alone by over 20 percent. Interest rates have also reached their highest point since 2009 thanks to successive increases since the end of 2021. All of this has proved a potent cocktail that has once again put consumers in extreme financial pressure.”
Despite strong contribution from its Boxer and Pick ‘n Pay Clothing Divisions, the group has not met its targets and has had to change its leadership.
“The performance of our Pick ‘n Pay business however has not met expectations. The board reflected on the latest performance of the Pick ‘n Pay grocery business and resolved the decisive action was required if we wanted to turn this business around from its current trajectory. The board has appointed Sean Summers as CEO with effect from 1st October to lead the company and he’s doing this with immediate effect.”
The returning CEO, Summers, says there isn’t a specific time frame to turn the ship around but it will happen however long it takes.
“So, this is a journey we are on here and from an investor and analyst perspective. You ask yourself well how long is it going to be, maybe a multi- year journey and this is because to turn this around fundamentally and sustainably it takes that long. This is a big ship, but we will do it.”
While recognising that the turnaround will be a multi-year journey, Summers’ immediate focus is to return to the basics.
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.
