• Pick n Pay Group has posted an over half billion Rand loss for the 3rd quarter of 2023.
• The retailer says that loadshedding and heightened competition led to disappointing results.
• It spent nearly R400 million on diesel for generators to keep its stores open during loadshedding.

South African retail giant Pick n Pay has released its latest results for the third quarter of the year, stating plainly that they are “disappointing.”

The group made a R571.3 million loss in the 26 weeks heading into 27th August during a period it says it was “heavily impacted by loadshedding and increased competitive intensity.”

This contrasts with the R453.3 million profit the retailer made in the same quarter in 2022, a difference of 226 percent.

The impact that Eskom’s power outages had on Pick n Pay stores was significant, as operating diesel generators to keep the lights on and stores open during blackouts cost it nearly R400 million.

With record-setting levels of power outages stemming from an acute generation crisis being faced by Eskom this year, corporations are spending in droves to keep operations intact. In the last quarter rival retail group Shoprite said it had spent an eyewatering R1.3 billion to stave off the effects of loadshedding.

However, despite this massive chunk of operational expenses on diesel for generators, Shoprite still managed a trading profit of R10.8 billion across its South African supermarkets, including Checkers, OK and Shorpite, in the latest quarter.

Pick n Pay has said that no dividends will be paid out in the latest quarter on the back of a headline loss per share of 138.24 cents.

Earlier this month, the retailer’s chief executive Pieter Boone stepped down in anticipation of the poor results. Even if the board of directors said that the decision was an amicable one.

In his place returned Sean Summers who had previously served as CEO of the retailer from 1974 until 2007.

“Notwithstanding the difficult trading environment and the incremental abnormal costs, the Board was disappointed with the Group’s performance, particularly in Pick n Pay supermarkets,” the results state.

It continues that the Board took “critical action” and “as a consequence, the Board decided on new leadership, appointing Sean Summers, a Pick n Pay veteran who previously led the Group through a highly successful period.”

Pick n Pay’s trading profit for the quarter was squashed by vast “abnormal costs” from employee restructuring, incremental energy costs and duplicated supply chain costs from the transition from the Eastport distribution centre.

Despite losses, online sales grew by 76.3 percent, with a 100 percent year-on-year growth of the Pick n Pay ASAP! platform, as well as the interest of Pick n Pay groceries on the Mr D app.

Looking at the future, the Group says that it is refocusing its strategy on re-engaging customers and “rekindling their love for the Pick n Pay brand.”

It will look to improve customer service, energise staff, and enhance Pick n Pay’s buying capabilities through engaging suppliers. Management expects to face continued difficulties for the latter half of 2023 but anticipates financials for next year will be stronger.

[Image – Photo by Bruno Kelzer on Unsplash]