Pick n Pay puts job creation first
Retailer opens 74 new stores Ackerman hopeful amid turmoil
PICK N PAY Stores created more than 2 000 new jobs in the first half its financial year and opened 74 new stores as part of plans to grow its market share in the face of South Africa’s sluggish economic growth.
“The group is on track with its 2015 plan to create 5 000 new jobs per year by 2020. A further 2 100 new jobs were created in the first half of this year, bringing the benefits of work to more employees and their families”, Richard Brasher, Pick n Pay’s chief executive said yesterday.
Pick n Pay, South Africa’s second-largest food retailer, which signed a three-year wage agreement securing certainty after a deal with SA Commercial, Catering and Allied Workers Union, said it remained on track to spend close to R2 billion in capital expenditure this year on new store expansions and upgrading its current stores.
The announcement came as it posted its seventh consecutive growth in headline earnings yesterday, having cut costs following the implementation of its turnaround strategy.
Pick n Pay, which owns discount shopping chain Boxer, closed 0.89 percent higher on the JSE yesterday to trade at R66.63 a share as it reported that headline earnings had grown by 23 percent to 82.43 cents a share in the six months to August from 66.62c a share in the six months to August last year.
The group was unable to pass costs to consumers and capped food price inflation at 5.5 percent, below consumer price index food inflation of 10.7 percent over the period under review.
“Our job is to keep prices down. I cannot know if food inflation will be lower, but I do know that we will be in the front of the line to make sure that it comes down,” Brasher said.
The group indicted that the high levels of food inflation seen in recent months were beginning to alleviate. New products Brasher said Pick n Pay would give customers a “good time” in the upcoming holiday season.
“We are planning to offer new products to our customers, especially during the Christmas season. We will see the return of our Stikeez promotion and we have a lot that will come our customers’ way. Father Christmas will turn up. He might not have all the right presents, but he will be there,” he said.
Brasher was referring to Stikeez, a popular promotional campaign aimed at improving customer experience that captivated children.
Some of the Cape-Town based group’s financial highlights included an 18 percent increase in profits to R381.8 million in the period under review. Sales rose 7.2 percent and the interim dividend increased 24 percent to R2.99 a share.
Ron Klipin, a portfolio manager at Cratos Wealth, said the group’s turnaround strategy RAYMOND Ackerman, the former chairman of Pick n Pay, raised concerns yesterday about the political instability crippling the country amid the ongoing saga between Finance Minister Pravin Gordhan and the National Prosecuting Authority (NPA), coupled with the ongoing nationwide student #FeesMustFall protests.
But the 85-year-old businessman said there was hope that the uncertainty would pass.
Ackerman, who purchased the Pick n Pay supermarket group from its founder Jack Goldin and grew it into South Africa’s second-biggest supermarket chain with a R33.2 billion market cap, said the socio-political turmoil mirrored a similar period in the 1980s.
“The problems we are facing now in our universities and around minister Gordhan is exactly the same problem we had experienced in the 1980s. Everyone felt that things were bad then,” Ackerman said.
“I believe if we have the courage to stay positive, we will get through this,” Ackerman told fund managers at the company’s financial results presentation held in Cape Town yesterday.
Ackerman’s comments follow the decision by NPA boss Shaun Abrahams to charge Gordhan with fraud for extending the former SA Revenue Services acting commissioner’s contract when it expired. News of the charge caused the rand to drop by as much as 3.4 percent against the dollar last week.
President Jacob Zuma has set up a ministerial task team in response to the crisis in higher education, which his detractors have described as an attempt to avoid dealing with the real crisis.
“I have 14 grandchildren and I am trying to persuade their parents that this (South Africa) is the best place to be. That’s what people said in the 1980s. Thank God we stayed,” Ackerman said.
Earlier in the presentation, Ackerman’s son, Gareth Ackerman, who now chairs Pick n Pay, called on policymakers to take the retail industry seriously.
The retail industry was growing and made a major contribution to the economy and to transformation, he said.
“My plea is to the policymakers to understand this and to include retail in their thinking,” Ackerman said.
“Too often retail is not seen as a strategically important had resulted in major costcutting in areas such as consultants and management, as well as a more flexible staff scheduling.
“The smart shopper card has also changed the way Pick n Pay does business, with