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JOHANNESBURG – Pick n Pay, one of South Africa’s largest supermarket chains, yesterday rose after the group reported turnover growth of almost 10 percent in the financial year to the end of March, underscoring the resilience of its South African division, which clawed back market share from competitors.
The share closed 4 percent higher at R69.90 after it posted a trading update that showed its turnover had grown 9.6 percent during the period, compared with 7.1 percent in the same period last year.
The group said like-for-like turnover growth was 4.8 percent. Selling price deflation was 0.3 percent over the year. The group achieved like-forlike volume growth of 5.1 percent.
It said both headline earnings a share (Heps) and basic earnings a share were now expected to be between 20 percent and 30 percent higher. The group said its core South Africa division delivered comparable turnover growth of 7.4 percent.
It said its Pick n Pay and Boxer brands demonstrated consistent gains in market share over the year. “This achievement, in a very challenging trading environment, underlines the effective and consistent execution of the group’s long-term plan,” the company said.
“Over the past six years, a strong focus on improving cost and operational effectiveness has enabled the group to invest in a winning customer offer through lower prices, more attractive promotions, better and more innovative products, compelling value-added services and brighter and more modern stores.”
The company said its trading performance was delivered despite a difficult consumer environment in South Africa and some challenges elsewhere – in particular, a testing economy in Zambia and currency uncertainty and disruption in Zimbabwe.
“Notwithstanding this challenging background, the group expects to deliver on its goal of maintaining momentum on earnings growth alongside improved turnover growth.” Damon Buss, an equity analyst at Cape Town-based Electus Fund Managers, said the trading update was a continuation of the improved results reported in the first half of 2019.
“The improved shopping experience in their (Pick n Pay) new-format stores, more focused promotional strategy and enhanced supply chain has enabled them to start clawing back market share, albeit in a period where their biggest competitor (Shoprite) had significant supply chain issues,” said Buss.
He said the group’s selling price deflation of 0.3 percent indicated the weak position of consumers, with food retailers having to use promotions to drive volume growth.
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