Sunday Times

PnP strong, but puts champagne on ice for now

- ADELE SHEVEL and PALESA VUYOLWETHU TSHANDU

PICK N PAY is “more than halfway” through its turnaround, after the food retailer delivered its sixth successive reporting period in which headline earnings per share grew more than 20%.

“I’d say we’re past halfway. We wanted to get the underlying margin back to where we were and get our share of the marketplac­e,” said Pick n Pay CEO Richard Brasher.

“I feel like we’re demonstrat­ing that’s more possible today than when we first said it.

“We’ve had a strong year, we’ve created some momentum and we need to maintain and increase it. I’m not sure you could say we’re back — I think we’ll hold that on ice for our 50th birthday party [next year].”

Brasher came on board in February 2013, having been Tesco UK’s chief. Since then, Pick n Pay’s share price has increased more than 50%.

Brasher has helped stabilise the business and stopped it from losing further market share. The annual results to the end of February showed customer growth was up 7% year on year and sales rose 8.2% compared with 6.1% last year.

Costs are down and profits are up. The group opened 175 new stores and created 4 500 new jobs over the past financial year, adding 4.5% to total space. It has spent R4.2-billion in capital over the past three years and has committed to spending R5-billion over the next few years.

“And I feel we’re getting our fair share of the market which is something we haven’t really had since 2003,” said Brasher.

“In the early days we had to attend to our costs, which we continue to look at, but I’m encouraged that more customers and more turnover have ended up delivering this profit as much as good fiscal control.”

When Brasher joined Pick n Pay it was struggling with systems, losing market share and was beset by labour challenges.

Alec Abraham, a senior equity analyst at Sasfin Wealth, said that “a lot of execution risks dissipated with the arrival of Richard Brasher”.

“[He] was at Tesco, so on paper he was the perfect person to lead this turnaround. And while a lot of initiative­s were put in place by [his predecesso­r] Nick Badminton, there was a huge amount of execution risks which dissipated when he came along.”

Abraham said cost-cutting had been central to the group’s turnaround. “One of the things that they did is that they collapsed all of those buying teams. Something like

They are going to need to grow revenue and improve efficienci­es

nine buying teams collapsed into one procuremen­t office, so they can really use the might of their buying powers to get good pricing.”

The company’s dividend policy had been under scrutiny, with many claiming that the control the Ackerman family have on the company was outdated and needed review.

Abraham said there had not been any murmurs from the Ackermans about the company’s dividend policy, or about dismantlin­g the holding structure, but “that’s an issue most people are uncomforta­ble with”.

Part of the group’s turnaround strategy includes the 20 new nextgenera­tion stores that were added in the second half of the year, through new stores and refurbishm­ents.

 ?? Picture: ESA ALEXANDER ??
Picture: ESA ALEXANDER

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