Pick n Pay’s half-year results show the impact of unrest and liquor bans for the six months ending on 29 August. Group comparable headline earnings per share increased 90.9% year-on-year, with a group profit of 18.2%, but second quarter sales fell to -0.7%.
The group entered the financial year with positive trading momentum and delivered a strong first quarter result, with sales up by 9.0% compared to the previous period that was severely affected by Covid-19.
According to its SENS-statement, trading disruptions became a significant feature of the second quarter, including the resumption of government restrictions on alcohol sales which amounted to 55 days of lost liquor trade and the unprecedented civil unrest in KwaZulu-Natal and parts of Gauteng.
As a result of the unrest, 212 stores were severely damaged, two large distribution centres were destroyed and 551 stores were temporarily closed for safety, leading to the Group’s second quarter sales growth falling to -0.7%, with an estimated loss of sales of approximately R930 million.
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Restrictions on liquor sales made up a loss of another R800 million, with a combined total of R1.7 billion. Adding back this estimate of current period trade lost, the Group estimates it would have delivered sales of R47.7 billion during this half, up 8.0% on the same period last year.
“It has been an extraordinary six months since we delivered our last results. In April, we were reflecting on how we had adapted to the unprecedented challenges posed by Covid-19. We experienced another Covid wave and the resultant disruption to our business.
“No-one anticipated the terrible lawlessness of July and the devastating impact on infrastructure, businesses, communities and the most vulnerable in our country. What we experienced in July was the worst of South Africa, but it also brought out the best in South Africa,” Gareth Ackerman, chairman of Pick n Pay, said.
He expressed his pride in his colleagues who kept customers and each other safe and worked night and day to get the business back up and running and get food to people in the affected areas.
“The past six months have underlined how much business and government depend on each other. During and after the lawlessness, we depended on government to restore and maintain order. Government depended on us to rebuild, restock and reopen for customers as quickly as possible, and to commit to investment in the damaged areas.”
He said business and government must work together with honesty, transparency and in good faith. Ackerman also pointed out that restricting alcohol sales has been immensely damaging, while there is a wealth of evidence to show that it has little or no positive impact as a public health measure.
“Our concern is that the state of disaster is being used by elements of government to address liquor policy issues without resorting to the constitutional processes. We implore government to heed the evidence and resist the temptation to reach again for restrictions on alcohol sales.“
He also called for greater transparency from government with policies and proposals reflecting what government has said it intends to do, without last-minute changes or surprises.
“Government, like business, must also learn lessons from the July crisis, such as not rebuilding the Mooi River toll plaza in the same place to ensure it cannot be used again to block this artery and cripple the country.”