Pick n Pay forecasts 50% decline in half-year earnings

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  • Exacerbated by prohibition from trading in certain key product categories including alcohol, tobacco, clothing, general merchandise and hot foods.
  • These categories make up approximately 20% of the Group’s revenues, with higher gross profit margins relative to basic food and grocery lines.
  • CEO Richard Brasher said “Our business remains strong and stable, and well-placed to serve customers and shareholders in the future.”

JSE-listed retail giant, Pick n Pay Stores Limited with operations in Zimbabwe through TM and Pick n Pay merchandise is expecting a 50% decline in headline earnings per share (HEPS) for the half year period to 30 August 2020, excluding any impact from hyperinflation accounting in Zimbabwe.

This translates to more than 42.52 cents decline on the reported 85.03 cents of the previous corresponding period.

In an earnings update released on Tuesday, the retailer said the interim results will fully reflect the considerable impact of the COVID-19 induced crisis which saw the prohibition from trading in certain key product categories during level 5 of the South African Government’s COVID-19 Risk Adjusted Strategy including alcohol, tobacco, clothing, general merchandise and hot foods.

These categories make up approximately 20% of the Group’s revenues, with higher gross profit margins relative to basic food and grocery lines.

In a statement accompanying the earnings update, Group Chief Executive, Richard Brasher said, ““Through skill and tenacity, our stores have remained open and safe for staff and customers. This is a tribute to our management teams, store colleagues and franchise partners across the country. By working closely with our suppliers and service providers, our stores have remained stocked with the food and groceries that customers need and want. We have shown innovation, for example re-engineering our digital platforms to meet the large expansion in demand for online and click-and-collect shopping.”

“I want shareholders to understand and be reassured that the impact on our first-half earnings that we are announcing today derives solely from the specific circumstances of the pandemic, the impact of measures taken by government and ourselves to mitigate it, and the once-off costs of our VSP which has made the Group leaner and more competitive.

“Our business remains strong and stable, and well-placed to serve customers and shareholders in the future.”

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