DURBAN – Pick n Pay reported strong results on Friday as the JSE-listed retail giant reaped the rewards of its strategy over the past six years to reduce costs and improve operational activities in the face of a tough economic slowdown and subdued consumer spending, enabling it to outperform its competitors.
Chief executive Richard Brasher said on Friday that the results for the 53 weeks to end March 3 were the culmination of plans the company decided to embark on a few years ago.
“In the past six years, we have changed the trajectory of Pick n Pay. We succeeded in reducing costs, improved on the operational activities, pursued a clear and consistent long-term plan focused on building a leaner and fitter business which delivers consistent turnover and earnings growth by providing customers with better value-for-money, improved quality, more innovation and a genuine multi-channel platform with a strong online offer and attractive value-added financial services,” Brasher said.
Despite operating in an economy that grew by 0.8 percent in 2018, with figures from Statistics SA revealing that retail sales increased by 1.1 percent year on year in February, Pick n Pay produced numbers that were ahead of its peers in the industry.
The group reported a 26.1 percent increase in diluted headline earnings per share (Dheps) to 342.37 cents a share. Revenue increased to R90.47 billion, up from R82.49bn, while profit increased to R1.65bn, up from R1.3bn compared to last year, and achieving an internal selling price deflation of 0.3 percent against CPI food of 3.4 percent.
However, its operations in the Rest of Africa reported a 16.2 percent decline in profits as a result of constrained consumer environment in Zambia and currency devaluation in Zimbabwe.
The board declared a final dividend of 192 cents a share to take the total dividend to 231.10c, up by 22.4 percent compared to last year.
Its competitors like Shoprite reported 3.8 percent decline in Dheps for the year to end July 1. However, its recent results for the six months to end December, Dheps was down by 24.1 percent.
Spar’s headline earnings per share for the year to end September increased by 1.4 percent, while Massmart reported 23.5 percent decline in Dheps before restructure costs.
Jordan Weir, a trader at Citadel, said considering the tighter spending habits seen locally that had resulted from a slowdown in the greater economy, Pick n Pay had delivered a strong set of results.
“By focusing on the efficient downward management of costs and on the improvement of overall operational activities throughout the business, Pick n Pay has been able to deliver a high standard of quality in terms of both goods and innovative services to the end customer, while keeping prices at a widely palatable and affordable level,” Weir said.
He added that these numbers demonstrated the excellent foresight shown by the company as the implementation of these cost controls commenced around six years ago.
Pick n Pay shares closed 3.78 percent lower on Friday at R69.