Brasher’s farewell gibe at PnP rivals
● Departing Pick n Pay CEO Richard Brasher took a friendly swipe at his rivals this week, saying that overall the group was taking market share from most of them, with its core food and groceries segment on a par with Woolworths’ star food business.
Brasher, speaking at his last annual results presentation at the retailer, showed how Pick n Pay was ahead of rivals Shoprite, Massmart and Spar.
Brasher, who is retiring, said in an interview with Business Times that it was “tongue in cheek, if I’m honest. I felt it was quite sporting and I can probably get away with it as it is my last set of results.
“People quote their market shares in all sorts of different ways and so what I did was quote their numbers. These are the numbers that they [rivals] reported to the market for their half-year or full-year results at the end of December and then I measured us against their numbers.”
Asked if the group was taking market share from its rivals, Brasher said: “We must have done unless it came from somewhere else.”
In a presentation of the full-year results for the year ended February 28 2021, Pick n Pay South African turnover for the six months to December grew 7.3% compared to Shoprite SA’s 5.6% growth.
For Pick n Pay’s core food and groceries business, Brasher said group sales growth was 10.8% for the last six months of the 2020 calendar year, which was on a par with Woolworths Food’s 10.9% recorded in the same period. On a full-year basis, Pick n Pay said its food segment had increased sales 10% in SA “underpinned by sustained improvements across the group’s customer offer”.
But Pick n Pay’s full-year reporting period fell “entirely within the Covid-19 national state of disaster” and the impact of this was also keenly felt, with the group saying it had “resulted in an estimated R4bn in lost sales and R200m in additional costs” related to its response to the pandemic.
Pick n Pay, which for a significant portion of the financial year was unable to sell liquor, tobacco or clothing, reported that earnings, excluding one-off costs, were down 6.1%.
Protea Capital Management senior analyst Richard Cheesman said that “besides tobacco, liquor and clothing”, Pick n Pay’s “core food business performed very strongly, which is a great job”.
All Weather Capital fund manager Chris Reddy said: “If you look at pure food and grocery sales, of that 10.8% they are more or less in line with what Woolworths Food has shown as well.
“The segment has been boosted by a Covid working-from-home situation so we will see how that plays out with people starting to get back into offices.”
One area Pick n Pay is focusing on to boost market share is in the lower-income segment of the market, where its Boxer and Value Pick n Pay stores have been expanding rapidly.
Brasher said the group added 44 Boxer stores in the past financial year, which is the most added in any year. Expansion for this brand would continue in the current financial year.
Expanding in this category could include the purchase of Massmart’s Cambridge and Rhino brands, which are up for sale.
Brasher said during questions at the results presentation that Pick n Pay “should” consider Massmart’s Cambridge and Rhino stores.
“I think that Massmart did suggest that they were considering those assets to be noncore to them and you can see from the smile on my face those kinds of assets are core to us. It doesn’t mean we will pay any price for anything because we are building the business nicely organically, but if the opportunity came along and the price was right, then we will, I am sure, be in conversation,” said Brasher.
He confirmed in the interview after the presentation that Pick n Pay had “expressed an interest” to Massmart, which he thinks is “seeing if there is any appetite in the marketplace before they take matters further”.
Last month Massmart, in which US retail giant Walmart has a 51% stake, said it would sell 57 Cambridge Food and Rhino outlets, and Massfresh grocery assets. Later that month Shoprite indicated it may be interested in these assets.
Brasher said: “Our Boxer business and our Value Pick n Pay stores are performing very well and therefore if we can supplement our growth by that route [acquisition of stores] then we will look seriously at it.”
Massmart’s senior vice-president, group corporate affairs, Brian Leroni, said this week there had been “significant interest” in Cambridge and Rhino “and the overall process is on track”.
Brasher said the Boxer brand, with 300 supermarkets, still had “plenty of runway” ahead of it in terms of expansion possibilities. “That area of the market has always been very large because it’s the vast majority of the country.”
He said while it was important for the group to “do a great job and compete well against a Checkers or a SuperSpar or a Woolies”, it also needed to compete in this far larger portion of the market against other independent retailers.
Reddy said the fact that the lower-income segment offered the biggest growth potential is “not new information for retail, banking or other sectors and it is the reason why the likes of Shoprite, Pepkor and Capitec have focused on that segment and have been so successful”.
Asked if he had any parting words for his colleagues at Pick n Pay and new CEO Pieter Boone, Brasher said he would “continue to be their biggest fan” and also offer constructive criticism where he can.
“I’m hanging around [in SA] so I’m sure I will be able to pass on my pearls of wisdom, but mainly my support, to be honest. I think they are in a very good place for the future.”