Pick n Pay narrows first-half loss as turnaround gains traction – SABC News
Grocery retailer Pick n Pay reported a narrower headline loss in the first half on Monday on higher margins and tighter cost control, boosting confidence that CEO Sean Summers’ turnaround plan is beginning to deliver results.
The group’s headline loss for the 26 weeks ended August 30 narrowed 32% to R299 million, while trading profit rose 58% to R490 million.
Gross margin expanded 0.7 percentage points to 18.8%, supported by a better product mix and supply-chain improvements.
Shares were up 4.3% at R22.
The retailer has been rebuilding profitability through cost cuts, store closures, a revamped fresh food offering and improved inventory management that has reduced stock holdings and freed up working capital.
It introduced more than 50 new and upgraded fresh lines this year, driving stronger category growth and increased customer participation in its fresh food offering, Summers said.
“Customers are increasingly choosing Pick n Pay,” he added.
He said the initial benefits of turnaround measures were beginning to show in the financial results, with significant further benefits set to flow over the coming 2-1/2 years.
CONSUMERS UNDER PRESSURE
Chief Financial Officer Tina Rookledge said the retail environment remained challenging, with consumers under pressure and food inflation at a 16-year low, meaning retailers had to boost traffic to drive up sales in value terms.
Summers estimated the conflict in the Middle East, which has inflated fuel costs, had cut sales growth by about 3%, with every 1% loss in sales growth costing the retailer roughly R140 million to R150 million in income.
Group turnover rose 2.4% to R60.5 billion, supported by 6.3% growth at value retailer Boxer, while sales at the core Pick n Pay business were broadly flat after strategic store closures over the past year.