Pick n Pay says it lost an estimated R4-billion in sales last year due to restrictions on the sales of alcohol, tobacco and other products. But the supermarket group says its core food and grocery business still grew sales by 10% despite the impact of Covid-19 lockdowns.
In a trading and earnings update, the retailer said turnover grew by 4.3% over the year to end-February, with like-for-like growth of 3.1%. Apart from the margin impact of restricted sales, earnings for the year were also affected by once-off compensation costs arising from voluntary and other retrenchments under Project Future, its modernization and efficiency programme which aims to deliver R1-billion in savings over two years. Stripping the additional costs out, it said the comparable result demonstrated significant underlying positive momentum in its performance.
Pick n Pay lost 209 liquor trading days over the financial year, with reduced trading hours in all but three weeks of the period. The sale of cigarettes and other tobacco products was prohibited from late March until mid-August. The result was a 31% decline in liquor and tobacco sales for the year. Although clothing sales were prohibited during the Level 5 lockdown and subject to some continuing restrictions under Level 4, clothing sales increased by 1.3% year-on-year.
The group incurred R200-million in costs directly related to its Covid-19 response. Additional safety and hygiene measures cost R130-million. It paid a R50-million appreciation bonus to front-line staff in the first half of the year, while security and communication costs added a further R20-million. Under a voluntary severance programme, R100-million was paid in once-off compensation in the first half of the year, which was recouped through savings in employee costs in the second half. A further R100-million was paid in once-off compensation to employees retrenched as a result of a modernisation and restructuring of Pick n Pay regional and support office structures.
It expects headline earnings per share (HEPS) to be 15% to 25% below the 291.90c reported last year. Comparable HEPS, which exclude hyper-inflationary adjustments related to its associate in Zimbabwe, are likely to be 10% to 20% below the 282.82c previously reported. Comparable HEPS excluding the once-off compensation costs will be flat to 10% lower.The Group is very pleased with its performance in this most difficult year,” Pick n Pay said. “Once the disruption of Covid-19 is taken into account, the result will demonstrate a market-leading performance on core sales, and underlying strength and momentum in its quality of earnings.”
Pick n Pay’s shares closed 0.6% down at R54.30 yesterday.
Pick n’ Pay said it lost 209 liquor trading days over the FY (126 days in the 1st H and 83 days in
the 2nd), with reduced trading hours for all but 3 weeks of the FY ending 28 Feb 2021.
The sale of cigarettes and other tobacco products was prohibited between 27 Mar and 17 Aug.– Madima (@MaanoMadima) April 8, 2021
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