Pick n Pay Stores (PIK) H2 2024 earnings summary

Executive summary

• FY24 turnover rose 5.4% to R112.3bn, but trading performance weakened sharply in the core supermarket segment; Boxer delivered strong sales growth and higher trading profit.

• Consolidated comparable PBT was a loss of R1.7bn; reported losses included R2.7bn of losses on capital items, including material store impairments.

• A six-priority corporate plan targets a return to core-segment profitability, supported by store-estate changes, operating improvements and a two-step recapitalisation.

Financial highlights

• Turnover R112.3bn, up 5.4% YoY and 2.9% LFL; gross profit margin fell 150bps to 18.1%.

• Other income increased 17.1% reported and 4.2% underlying; reported growth included FY23 civil-unrest insurance recoveries and franchise-model changes.

• Trading profit was R385m; EBITDA was R960m, down 71.8%; comparable PBT was a loss of R1.7bn.

• Reported PBT loss was R4.147bn; comparable loss was R1.673bn after excluding capital items and non-cash hyperinflation impacts.

• EPS was -661.67 cents and comparable HEPS -254.72 cents; no dividend was declared.

Outlook and guidance

• FY25 operating cash burn after capex targeted at ~R1bn, versus R2.4bn in FY24; FY26 target is operating cash flow breakeven after capex and plan costs.

• FY27 target is core-segment trading result after leases breakeven, versus a FY24 loss of R2.6bn; medium-term trading margin target is 2%+.

• Store-estate reset expected to deliver ~R850m savings or loss avoidance; operating-model initiatives target R1.3bn of benefits over three years.

• Recapitalisation and working-capital initiatives target >R500m annualised interest savings and >R1bn from working-capital optimisation and one-off disposal proceeds.