Retail giant Pick n Pay has reported progress in its turnaround plan, with Boxer leading the charge after delivering 13.9% turnover growth for the six months to August 31.
The group’s latest interim results show a business steadily regaining its footing, with growth across supermarkets, clothing, and online sales reflecting renewed customer confidence and operational improvement.
Pick n Pay CEO Sean Summers said the results show clear progress in rebuilding the business.
“These results demonstrate that our turnaround is gaining traction, and we remain on track with each of our strategic priorities.
“Like-for-like sales growth has accelerated, our customer numbers are growing, and Boxer continues to outperform.
“Importantly, Pick n Pay Supermarkets’ market share has stabilised, notwithstanding the reduction in the size of our supermarket estate under our Store Estate Reset programme, a clear sign that we are on the right path,” said Summers.
Loss-making business
However, Summer was concerned about the company’s profitability.
“However, Pick n Pay continues to be loss-making at the trading profit level, with company-owned supermarket like-for-like sales growth lagging slightly behind like-for-like operating cost growth in the reporting period.
“The multi-year journey of returning Pick n Pay to a profitable and future-fit business continues to be tackled in a purposeful and methodical manner,” he said.
Boxer, now a separately listed company and 65.6% owned by the group, is a star performer.
It continues to expand its footprint and strengthen its position in South Africa’s discount retail market.
Group turnover increased by 4.9%, with like-for-like sales up 4.7%. Pick n Pay’s South African company-owned supermarkets achieved 4.8% like-for-like growth, well ahead of internal selling price inflation of 2.1%
Customer growth in these stores rose sharply to 7.4%, almost double the rate recorded in the previous financial year.
Pick n Pay Clothing delivered a 12% increase in turnover and marked a key milestone with the opening of its 400th stand-alone store, while online sales surged 34.4%, supported by strong performance on both the ASAP! platform and Pick n Pay groceries via Mr D, which together grew 44%.
The group also reduced its headline loss per share by 56%, driven by operational improvements and interest savings from its recapitalisation efforts.
Focus on expanding Boxer
Summers announced the near completion of the Store Estate Reset programme, characterising it as a significant milestone for the business.
“This is an important milestone. Going forward, any further changes to our store estate will simply be a normal part of assessing each store’s performance as leases come up for renewal.
“Critically, the optimisation of our store estate has removed a large number of loss-making stores out of the system, allowing us to serve our customers better and to support our long-term sustainable growth,” said Summers.
He confirmed that the group will invest R2.2-billion over the full financial year, focusing on expanding Boxer and Pick n Pay Clothing, while Pick n Pay Supermarkets will see targeted investment in strategic store revamps and customer-facing improvements.
Summers explained that digital transformation remains a key focus considering that the company recorded 44% year-on-year growth in on-demand grocery sales through ASAP! and Mr D.
The Smart Shopper loyalty programme reportedly added more than 600 000 new customers but only grew loyalty sales by 9% year-on-year.
“Our commitment to the country in delivering a sustainable future for all our people has never wavered, and if anything, we’ve deepened it, from feeding vulnerable families through Feed the Nation and supporting schoolchildren through our Schools Club to growing food gardens and protecting our environment,” said Summers.
Consumers under pressure
Summers said consumers remain under strain but emphasised that the company is well-positioned to continue improving performance.
“This is a trading environment that is seriously constrained. Our customers are under immense pressure,” Summers said.
“Given this, I’m encouraged by the progress made and proud of the team’s incredible hard work in rebuilding the business for long-term sustainability.
“Our focus in the second half of the year remains firmly on improving our offer for our customers and on improving our operational execution, laying the groundwork for Pick n Pay’s return to profitability.
“While reaching break-even remains a multi-year journey, the investments we are making to rebuild retail excellence will ensure sustainable, long-term profitability.
“The work we are doing now will manifest itself in the future, and every investment we make is to ensure our long-term success.”
