• Pick n Pay told shareholders that the reason for a drop in sales was down to a lack of promotional activity.
• The reason for this comes down to loadshedding and the retailer needing to address that crisis.
• Between March and June Pick n Pay spent R300 million on diesel for generators at stores.

On Wednesday morning Pick n Pay shared its trading statement for the first half of the 2024 financial year with shareholders.

Much like the rest of South Africa, the retailer has been beset by loadshedding and that has affected Pick n Pay in an interesting way. The retailer reports that sales declined 0.3 percent in the first half of the year because it didn’t run promotions.

“The slower sales momentum relative to the 3.2% reported for H2 FY23 was a consequence of reduced promotional activity during the period as Pick n Pay managed the impact of extraordinary operating cost pressures caused by elevated load shedding. Sales momentum recovered towards the end of the period as reduced load shedding in June and early July enabled Pick n Pay to intensify its promotional programme,” the retailer said.

However, even when taking this growth at the end of the reporting period into account it’s still lower than the same in the 2023 reporting period -2.4 percent this year versus 2.9 percent last year.

To really showcase just how badly loadshedding impacted sales, the total sales in South Africa grew 4.4 percent thanks to Boxer SA boosting the overall figure with 15.4 percent compared to 15.9 percent across the rest of Africa. To put this into perspective there are just 186 Pick n Pay stores across the rest of Africa and 2 018 just locally.

However, the good news is that Pick n Pay managed to keep inflation lower than expected.

“Group South African internal selling price inflation for the 20-week period was 9.5%, well below Statistics SA Food CPI of 13.2% for the period, reflecting the Group’s continued commitment to delivering low prices to consumers,” Pick n Pay reports.

In order to keep stores running during rampant loadshedding, Pick n Pay makes use of generators and the retailer reports that between March and June 2023, it spent R300 million on diesel.

While seemingly not related, the retailer says that it has completed the voluntary severance programme and junior store management restructuring programme it launched in March.

“The Group anticipates an H1 FY24 restructuring charge of approximately R250 million as a result of these and other restructuring efforts, and anticipates related annualised on-going cost savings of approximately R300 million,” shareholders were told.

Pick n Pay management does expect the second half of the year to be better but given how badly loadshedding impacts the retailer, that will depend on how well Eskom manages the ongoing energy crisis.