Judul : Pick n Pay Reports Mixed Performance Amid Turnaround Efforts
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Pick n Pay Reports Mixed Performance Amid Turnaround Efforts
27 Aug 2024 (Johannesburg Stock Exchange) Pick n Pay Stores Limited has reported mixed results for the 21-week period ending July 21, 2024, as it continues to execute a turnaround plan under a refreshed management team. The results, disclosed in a trading update, highlight strong performance from the Boxers segment, but a more tempered improvement from the Pick n Pay segment.
Sales across the Group increased by 4.5%, with like-for-like sales growing by 3.7%. Within this, Boxer sales surged by 13.5%, marking a big move, driven by both strong like-for-like performance and new store openings. In contrast, Pick n Pay sales showed a minor move, increasing by just 0.1%, with the South African (SA) segment rising by 0.6%. The Pick n Pay segment's performance was impacted by the closure of 16 supermarkets during the period.
Pick n Pay Clothing reported a 10.3% growth in standalone store sales despite challenges such as the late arrival of winter weather and port delays affecting like-for-like growth, which stood at 0.7%. Online sales exhibited a very large or significant move, growing by 63.9% and maintaining the momentum from the previous fiscal year.
According to information available from the Johannesburg Stock Exchange (JSE), the Group's internal selling price inflation was recorded at 4.7%, a decline from the 7.3% inflation rate reported for the full FY24 year.
The performance of Pick n Pay SA Supermarkets is a key turnaround indicator. There was a notable improvement in like-for-like sales growth to 2.0% for the period, a development from the -0.4% recorded in the second half of FY24. Company-owned supermarkets, previously underperforming, saw like-for-like sales rise from -0.5% to 3.6%, signaling progress in the turnaround plan.
However, the Group's trading statement indicates a challenging outlook for earnings. Earnings per share (EPS), headline earnings per share (HEPS), and comparable HEPS for the first half of FY25 are anticipated to decrease by more than 20% compared to the first half of FY24. This aligns with CEO Sean Summers' earlier warnings about potential short-term declines before improvements take hold.
The Boxer segment is expected to show positive year-on-year trading profit growth, but the Pick n Pay segment's trading profit is predicted to decline. Overall, Group trading profit for the first half of FY25 is expected to decrease year-on-year. The Group cites several factors impacting profitability, including increased promotional activity leading to a decline in gross profit margin and higher bank finance costs.
Despite the forecasted earnings decline for the first half, the Group remains optimistic about achieving a meaningful improvement in full-year FY25 profit before tax and capital items. This optimism is based on anticipated Boxer trading profit growth, a reduced full-year trading loss for the Pick n Pay segment, and decreased interest charges in the second half of FY25 due to the recapitalization program.
Pick n Pay's balance sheet has been strengthened following a R4 billion rights offer. The Group's capital expenditure for FY25 remains within expectations, with well-managed inventory levels in both the Pick n Pay and Boxer segments. The planned initial public offering (IPO) of the Boxer business, part of the recapitalization strategy, remains on track. The Group's financial results for the first half of FY25 are expected to be released on October 28, 2024.
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