CAPE TOWN-based supermarket giant Pick n Pay – now with new CEO Richard Brasher at the helm - has emerged a stronger business than six months ago. But even though directors are encouraged
by the improvement, they are not yet satisfied with Pick n Pay’s performance.
Pick n Pay reported a 7,5% hike in sales to R30,1bn in the half-year trading period to end September. ‘Like-for-like turnover growth was 3,1% with new stores contributing 1,7% to the company’s trading space and 4,4% to sales. Gross profit crept up 0,4% to R5,5bn – representing a gross margin of over 18%. Chairman Gareth Ackerman noted: “We are encouraged by the margin enhancement, which is due in part from cost savings and efficiencies achieved in our supply chain.”
He said Pick n Pay was pleased with the improvements at its Longmeadow Distribution Centre (LDC) in Johannesburg. “Having provided significant challenges in the past, LDC has reduced operating costs and is producing significantly improved service to stores.”
Ackerman said Pick n Pay’s Philippi Distribution Centre (PDC) in the Western Cape continued to perform well. “The PDC provided us with a sound benchmark of how central distribution can work to the full advantage of the company.” He said Pick n Pay would be rolling out some of Philippi’s world-class functionality to the company’s other distribution centres around the country.
Pick n Pay’s trading profit came in at R315m – representing a trading margin of just 1,1%. While the all-important trading margin (which effectively means Pick n Pay is banking 1c on every rand sold at its tills) has improved, it is still markedly lagging its rival supermarket groups like Shoprite, Spar and Woolworths.
New CEO Richard Brasher seemed upbeat about his first few months at the helm. He said that over the course of the last six months Pick n Pay had delivered an improved performance, built a stronger business and agreed on a clearer plan for the future.
“We are determined that Pick n Pay customers will benefit from our investment in infrastructure through improved availability, choice, quality and price.”
Brasher stressed the management team was resolute in improving Pick n Pay’s customer offering. He added that Pick n Pay Online had grown into one of SA’s top online businesses, with turnover growth of 24% on last year and an increase in online shoppers of almost 16%.
Looking ahead, Brasher felt there was “ample opportunity” to grow in areas where Pick n Pay doesn’t currently trade. He pointed out that there was a strong second half opening programme with 64 new stores planned in the next six months. This would increase selling space by 2,8%.
By Jenni McCann