Pick n Pay has reported a solid half-year financial performance, marked by a massive surge in online sales.
The retail group today published its financial results for the six months ended 28 August, saying it achieved 82% online sales growth during the period.
The group turnover was up 11.5% year-on-year, while the gross profit margin increased from 18.2% to 19.4% (R10 billion), and an interim dividend of 44.85c per share was declared.
In the six months, the company says the online sales growth was driven by the August 2021 relaunch of the group’s on-demand online offering as Pick n Pay ASAP!
The on-demand grocery delivery app was relaunched in an effort to compete with the Checkers Sixty60 mobile app.
Pick n Pay credited the surge in online sales to its Ekuseni strategy, whose goal is to build a market-leading online grocery business. To achieve this, the retail group is forging relationships with key partners, and has since reached a commercial services agreement with the Takealot Group.
“We have worked in conjunction with Mr D to launch a Pick n Pay food and grocery offer on the Mr D app. After extensive trials, the delivery service went live from a limited number of stores in early October and is on track to expand to 300 stores nationwide by December 2022. The group is confident this new offer will drive significant incremental online growth,” says the retailer.
Pick n Pay adds that it brings to the app its “extensive store network, stock management system, fresh product offering and in-store picking experience”.
“Mr D provides strengths in user-interface design, a 2.5 million active customer base, and a delivery fleet of 15 000 scooters,” says Pick n Pay.
Mr D is a subsidiary of South African e-commerce retailer, Takealot.com, which is part of the global internet group, Naspers.
Ekuseni, which means a new morning or new dawn, is Pick n Pay’s strategic roadmap that seeks to accelerate growth in key strategic areas, including online, in order to realise the full potential of the group.
With the Ekuseni plan, Pick n Pay says it aims to build the “most compelling and effective” online food and grocery business in SA and will continue to invest in technology to accelerate digital innovation across its operations.
“The launch of our Ekuseni strategic plan in May was a landmark moment for the group,” says Pick n Pay CEO Pieter Boone.
“I am proud of what our teams have achieved in the five months since that launch. We are rejuvenating our Pick n Pay stores at pace, and the sales growth and customer feedback in these stores is very encouraging.
“We have also launched our new Pick n Pay online grocery offer on Mr D. It will be the best offer in the market, and we will roll it out nationally by the end of the year.
“We made it clear when launching the Ekuseni plan that FY23 would be an investment year, with costs in implementing the plan, and investing to get the right prices for consumers,” he notes.
“The next six months will also continue to see strong headwinds, including inflationary pressures, rising energy prices and load-shedding. However, I am incredibly energised by the spirit and commitment of our teams. We are delivering for our customers, and there is plenty more to come from the Pick n Pay Group.”
Meanwhile, in the period under review, Pick n Pay says the combined impact of increased load-shedding and sharp fuel price increases has been felt particularly hard. The group spent R110 million more on energy costs in the first half of fiscal year 2023.
“Given that load-shedding accelerated in the later part of the period, the H2 impact is likely to be more severe,” it cautions.
