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• Group Turnover: ZAR56.1 billion, up 3.7% (2.9% on a like-for-like basis).

• Gross Profit Margin: 17.9%, contracted by 60 basis points.

• Other Income: Up 21.9%.

• Trading Expenses: Increased by 1.8% (2.6% on a like-for-like basis).

• Trading Profit: ZAR82.5 million, up from ZAR32 million last half.

• EBITDA: ZAR187.7 million, down 38%.

• Comparable PBT: Loss of ZAR1.1 billion, compared to ZAR0.8 billion last year.

• Boxer Sales Growth: 12% (7.7% on a like-for-like basis).

• Boxer Store Expansion: Planning 53 new stores in the second half, totaling 65 for the year.

• Pick N Pay South Africa Sales: Contracted by 0.3%.

• Internal Selling Price Inflation: 4.3%, down from 7.3% in FY24.

• Net Gearing: Improved from ZAR6.1 billion to ZAR2.3 billion.

• Cash Flow from Operations: Generated ZAR200 million.

• Working Capital Contribution: Added ZAR800 million to cash flow.

• CapEx Spend: Curtailed to ZAR600 million.

• Rights Offer: 104% oversubscribed.

• Boxer IPO: Planned for this year, expected to raise between ZAR6 and ZAR8 billion.

• Warning! GuruFocus has detected 7 Warning Signs with STU:PIK.

Release Date: October 28, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Pick N Pay Stores Ltd (STU:PIK) reported a group turnover increase of 3.7% to ZAR56.1 billion.

• Boxer, a subsidiary of Pick N Pay Stores Ltd (STU:PIK), demonstrated strong sales growth, with a 12% increase and continuous market share growth.

• The company successfully executed a rights offer that was 104% oversubscribed, improving net gearing from ZAR6.1 billion to ZAR2.3 billion.

• Pick N Pay Stores Ltd (STU:PIK) plans to launch an IPO for Boxer, expected to raise between ZAR6 billion and ZAR8 billion, which will strengthen the balance sheet.

• The company has shown strong cost control, with trading expenses increasing only 1.8% on a like-for-like basis.

Negative Points

• Pick N Pay Stores Ltd (STU:PIK) reported a gross profit margin contraction of 60 basis points to 17.9%, reflecting a highly competitive trading environment.

• The company recorded a trading profit of only ZAR82.5 million, despite being up from ZAR32 million last year.

• EBITDA decreased by 38% to ZAR187.7 million, impacted by depreciation savings from loss-making store impairments.

• Pick N Pay South Africa's sales contracted by 0.3%, affected by store closures and franchise terminations.

• The company reported a comparable PBT loss of ZAR1.1 billion, up from a ZAR0.8 billion loss last year, due to incremental financing costs.

Q & A Highlights

Q: Can you speak to how you expect the Pick N Pay gross profit margin trajectory to change and how you reverse the impact of reduced supplier incentives? A: Lerena Olivier, CFO, explained that the contraction in gross profit margin is largely in the base now, and they do not foresee further contraction in the second half. The focus is on maintaining competitiveness and working with suppliers to support the business.