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Send  Print  Share  RSS  Twitter  21 Oct 2009

Pick n Pay optimistic about the future

 
Johannesburg, Oct 21 (I-Net Bridge) Retailer Pick n Pay (PIK) on Wednesday said that its management team was focused on ensuring that it did not only grow top line sales, but also improve the efficiency of every part of its operation.
"We are bullish about the next five years as more of the foundation we have laid translates into visible benefit," said CEO Nick Badminton.
The retailer said it continued to make significant progress in its efforts to transform.
"Our revamped private label offer has delivered 26% sales growth. We are giving customers a great value alternative to the leading brands," it said.
It further noted that the three Pick n Pay Express stores opened were performing ahead of expectations.
A further two will be opened in the next month, it said.
It pointed out that it had all but completed the process of converting Score to Pick n Pay franchise and Boxer.
"We now sell as much from 48 conversions as we did from 126 Score stores."
Earlier Pick n Pay reported headline earnings per share for continuing operations for the six months ended August 2009 of 100.30 cents - up 11.1% from the 90.31 cents reported last year.
Diluted HEPS from continuing operations amounted to 98.85 cents from 89.76 cents and diluted HEPS 84.64 cents from 80.53 cents before.
The group declared an interim dividend per share of 39.75 cents for Pick n Pay Stores (+11.2%) and 19.31 cents for Pick n Pay Holdings (+10.6%).
Operating profit at 927.8 million rand was 35.9% above last year, and included a profit on the sale of certain properties of 190.9 million rand.
Turnover for the Pick n Pay group for the period increased 12.3% to 26.6 billion rand.
Badminton said that the six months had been `very tough` and that the Group had performed satisfactorily in this environment, but very well on a number of key strategic initiatives under way.
"This has been an exceptionally tough trading period in a recessionary economic climate which has had a marked effect on consumer spending. However, we expect the recent 5.5% reduction in interest rates and rapidly reducing inflation to ease the strain on consumers` disposable income in the period ahead," said Pick n Pay.
The retailer said it continued to be South Africa`s lowest-priced retailer - although it was proving challenging to get customers to believe this given the quality of its offer and its high store standards.
Overall, continuing operations gained 0.4% of market share in the period with significant gains in every fresh food category.
Highlighting some of its operations, the group noted that Franklins Australia produced a 3.3% increase in turnover in Australian dollars, and that its profit before tax for the period, before capital items, increased to 14.7 million rand this year from 3.5 million rand last year.
The key driver to this improvement was enhanced performances by refurbished stores, which included an introduction of a comprehensive fresh offer and a wider range of perishables.
"We have now completed 15 refurbishments, with a further seven stores to be completed by the end of the financial year."
Pick n Pay and Boxer increased turnover by 15.3%, which resulted in the gained market share.
"In addition to the Score conversions, we opened five new Pick n Pay supermarkets in the period with a further seven due to open in the second half of the year," it said.
Boxer converted eight Score stores in the period and will convert another two in the second six months as well as open two new stores.
"Our accelerated refurbishment programme of Pick n Pay Supermarkets is now under way and we anticipate completing 34 franchise and corporate refurbishments this financial year."
The enhanced turnover growth experienced by the stores completed to date gives us the confidence to accelerate the programme further and the company plans to refurbish a further 60 stores, including franchise stores, in the next financial year.
Pick n Pay said a number of factors had a significant impact on its earnings growth.
These included: its continued investment in keeping prices down, electricity costs which soared and looked set to escalate further as well as a prudent provision against certain franchise debt arising from franchisee working capital constraints caused by the financial crisis.
"Notwithstanding the worst recession in decades, we have still delivered headline earnings growth and have not been distracted from introducing the strategic imperatives and changes to the business that were required. We have seen substantive change and investment in the business over the last three years and the period ahead will see even more.
"While many of these improvements have already begun to reap benefits (e.g. Score conversions, private label, fresh foods, SAP) others such as supply chain will deliver their full potential in the longer term," it said.
In addition, Pick n Pay announced that Chairman Raymond Ackerman would be retiring the chairmanship of the company effective March 1 2010, after a career at the company spanning 43 years.
He will stay on as an advisor to the company performing an ambassadorial role and will continue to be based at the company`s head office in Cape Town.
Pick n Pay Holdings (Pikwik) chairman Gareth Ackerman (52) has been confirmed by the board as the new non-executive chairman of Pick n Pay Stores.
The position has been changed to a non-executive one in line with corporate governance recommendations.
"In March next year, I will be in my 80th year. The company under CEO Nick Badminton has done some incredible forward planning and the strategic direction taken by the company has resulted in a five year plan that is both remarkable and very confident," said Ackerman Snr.
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