CFO Lerena Olivier: Pick n Pay results made possible by building a better business

Lerena believes their positive results and response to Covid-19 are a reflection of good teamwork.

On 12 May, Pick n Pay released their financial results for the year ended 1 March 2020, delivering its seventh consecutive year of sales and PBT growth.

Pick n Pay CFO Lerena Olivier is proud of this “record of consistent progress that few others can match in these tough times”. 

However, she says that bedding down IFRS 16 was a huge challenge given the impact on Pick n Pay’s balance sheet. “It really was a fundamental change, and I was fortunate to have a very efficient and highly skilled finance team to help me.” 

The application of hyperinflation in Zimbabwe has also added a layer of complexity, with currency devaluation in the region reducing the value of Pick n Pay’s investment in TM Supermarkets.

Despite these challenges, Lerena prides herself on Pick n Pay’s achievement, which they made possible by building a better business – having the right plan and implementing it steadily over a number of years. “Each reporting period we have been able to report on how we have become more relevant, more innovative, more consistent, more modern and more reliable, while providing better value for customers.” 

The highlights

According to Lerena, there were a number of highlights to Pick n Pay’s results, which was characterised by its team providing lower prices and greater value for customers. “Pick n Pay Value and Boxer stores delivered strong performances and we recorded sustained growth across our clothing and liquor businesses. 

Other highlights included: 

  • SA EBITDA was up 8.4 percent to R5.9 billion
  • Group EBITDA was up 7.2 percent to R6.1 billion
  • Gross profit margin was up by 0.6 percent points to 19.7 percent
  • Growth in trading expenses was restricted to 6.3 percent year-on year
  • Pick n Pay kept internal inflation to2.6 percent, against CPI Food of 3.6 percent, supported by greater cost control
  • Pick n Pay opened 130 new net stores, which added 3.2 percent to turnover growth
  • Pick n Pay upgraded or launched 1,500 own brand products (house brands)
  • Centralised distribution in Pick n Pay is now close to 80 percent, with Boxer at 45 percent
  • Smart Shopper was voted SA’s best loyalty programme for seventh consecutive year, with over R4 billion in personalised vouchers issued to loyalty customers this year
  • Pick n Pay’s value added services income was up 14.2 percent
  • Pick n Pay was the first retailer in SA to offer deposits at till points through partnerships including TymeBank, FNB, Investec and Discovery
  • 8,000 insurance policies were sold in partnership with Hollard
  • 4.6 million domestic and cross-border money transfers were recorded

Although Pick n Pay has made huge improvements in efficiencies, Lerena believe there is still more they can do. “Project Future, which we launched in January this year [2020], will help create a simpler and more effective organisation, and aims to reduce operating costs by R1 billion over the next two years.”

Stepping forward during Covid-19

From March, Lerena says that dealing with Covid-19 has been a major challenge. “The executive team running the crisis have been incredible and are a true reflection of what teamwork can deliver. It’s been an important lesson for us all about what we really can deliver when we work as a team with a firm goal in sight.” 

She believes the values of Pick n Pay has never shone through more clearly than during Covid-19. “We stepped forward when it counted, and our people have performed truly heroic work in this national emergency.”

Lerena acknowledges the Pick n Pay and Boxer teams’ outstanding behaviour, the IT team’s faultless delivery in responding to substantial additional demands from people working from home and from the sharp increase in online sales, the supply chain team’s tireless work to keep the stores full, as well as the store teams’ labour under punishing pressure. 

“As an essential service, we are not only working under extraordinary circumstances, but are also managing the financial impact of trade restrictions and social distancing measures on our business, and of the additional investments necessary to make sure our people and our customers are as safe as they can be in our stores,” she says. “It has placed demands on all of us to be more flexible, more understanding, and certainly faster in our decision making and our execution.”