Bottoms up: Pick n Pay loses R4 billion in sales, mostly owing to alcohol and tobacco bans

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Pick n Pay lost 209 liquor trading days over the financial year.
Pick n Pay lost 209 liquor trading days over the financial year.
Bloomberg

Pick n Pay said on Thursday that its group turnover was significantly impacted by the prohibitions on the sale of alcohol and other products for significant parts of the year, which resulted in an estimated R4 billion in lost sales.

In an update to shareholders, the retailer said its financial year fell almost entirely within the National State of Disaster caused by Covid-19 which directly resulted in its 4.3% group turnover growth.

Pick n Pay lost 209 liquor trading days over the financial year, with reduced trading hours for all but three weeks of the financial year. The sale of cigarettes and other tobacco products was prohibited between 27 March and 17 August. Due to these restrictions this division of Pick n Pay saw a 31% slump over the year.

According to the group, core retail sales, which include all food, grocery and general merchandise categories, delivered a market-leading sales performance in its core food and grocery offer in South Africa, accelerating growth from 9.9% in the first half of the year to 10.1% in the second half.

Despite prohibitions on clothing during the hard lockdown, clothing sales increased 1.3% year-on-year.

The retailer said R100 million was paid in once-off compensation to employees who volunteered for the voluntary severance programme in Pick n Pay in the first half of the financial year. However, this cost has been fully recouped through savings in employee costs in the second half of the year.

The group expects the headline earnings per share for the year to decreased between 15% to 25% when it releases its year-end results on 21 April.

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