CFO Lerena Olivier: PnP open to new growth opportunities, despite disruptions
Pick n Pay saw positive growth in its results despite Covid-19 and civil unrest disruptions.
Pick n Pay has reported a 90 percent increase in its headline earnings per share for the 26 weeks to August, despite losing R1.7 billion in sales as a result of the civil unrest in July, as well as the ongoing impact of the Covid-19 pandemic.
Pick n Pay CFO Lerena Olivier said that the half-year was severely disrupted. “We still had some liquor restrictions [due to Covid-19 restrictions], so there was still about R800 million worth of liquor turnover that we did not receive this year.”
Besides the liquor restrictions that are still in place over weekends, Pick n Pay was also affected by the civil unrest during July. “It is largely covered by insurance and is therefore not that significant in terms of a bottom line for us, but definitely hurt us on the top line,” Lerena explained.
A total of 212 stores across the retailer’s estate were damaged and looted during the unrest period, and 551 stores were closed preventively to protect staff and customers. While most of the stores have started operating again, there are still 45 fthat haven’t reopened yet. “Even where we have opened some stores, they are not running with optimum till banks at this stage, and we still have some shortages of equipment,” Lerena added. “We are prioritising that, but we made sure that we could open the doors as quickly as possible to ensure that our customers can have the groceries and food stuff they want to buy.”
Additionally, the economies Pick n Pay trade in have also been significantly impacted by the Covid-19 pandemic – specifically the travel restrictions on the hospitality industry. “Those economies are very, very reliant on tourism, so we are seeing the impact of that.”
However, she said the fact that Pick n Pay’s higher-margin clothing and general merchandise sales recovered after the initial hard lockdowns in 2020, supported the year-on-year profitability of the retailer.
With its profit margins increasing for the reporting period, Pick n Pay has opened a couple of new stores and is open to new growth opportunities. “We have proved that we can run a generic growth programme very, very successfully,” Lerena said. “We also know that we can do that in an extremely cost-effective manner. So we are open to any opportunities where there’s growth in the right areas, as long as we make sure that capital will bring the required return for our shareholders.”
She added that there are also growth opportunities in the other countries Pick n Pay trades in. “Our business in Zimbabwe had a very strong half-year, showing positive volume growth for this half. So it’s a business unit that is profitable and that contributes to the group’s overall profitability.”