TRADING UPDATE FOR THE 52 WEEKS ENDED 27 FEBRUARY 2022
- Pick n Pay delivered a solid trading update where it reported an increase in sales of 5.2%, recovering from the riots and looting in July 2021, in an extremely competitive operating environment.
- Peter Boone, the recently appointed CEO, stated that the group was changing its focus from that of a serving its traditional middle-class markets to that encompassing the higher-end of the market – in addition to the lower end income market.
- Its Boxer brand is already focused on the lower end of the market, offering a limited range of more affordable foodstuffs. Boxer is well entrenched in both Gauteng and KwaZulu-Natal, with these regions seen as having good growth prospects.
- Growing Pick n Pay’s share of the upper end of the market should prove to be challenging. Checkers’ innovative business model and competitive pricing is already well entrenched in this end of the market, having attracted price-conscious customers from Woolworths.
- Pick n Pay’s margin of 3.50% versus that of Checkers’ and Woolworths’ at 7% also poses a major challenge. But the latest update appears to show Pick n Pay to be turning the ship around.
- HEPS growth of 8% to 18%, excluding insurance claims, has excited the market after years of tepid results. It is early days yet in terms of the turnaround, but the full set of results should provide a clearer picture of future prospects.