HARARE – TM Supermarket boosted profits in the 52-weeks to February 25 2018, contributing significantly to South African retailer Pick N Pay Stores’ financial performance during the period.
Pick n Pay has a 49 percent investment in Zimbabwe’s TM Supermarkets (some of which have been rebranded).
According to Pick n Pay chief executive officer Richard Brasher, the Zimbabwean operation was the best performer within the Rest of Africa division (the group has an established presence in Botswana, Lesotho, Namibia, Swaziland, Zambia and Zimbabwe).
“The group’s franchise operations performed well, particularly in Namibia and Swaziland, while the outstanding performer in the Rest of Africa segment was TM Supermarket in Zimbabwe.
“TM is benefiting from a positive contribution from its Pick n Pay branded stores and increasing customer demand for Pick n Pay own brand products,” said Brasher.
“The team demonstrated sound gross margin management and good expense control, to deliver strong profit growth.”
During the period under review, Pick n Pay’s share of TM Supermarket’s profits was up 45 percent year-on-year, with 58, 5 percent growth in local currency.
The group’s foreign operations contributed R4, 6 billion of segmental revenue this year, up 9, 3 percent in constant currency terms, “notwithstanding difficult trading conditions in some of these regions,” said the group.
Segmental revenue for the Rest of Africa division increased 7, 7 percent year-on-year to R4, 6 billion, with segmental revenue in constant currency up 9, 3 percent, 1, 4 percent on a like-for-like basis.
Profit before tax was up 27, 7 percent to R287, 9 million, underpinned by the strong performance from TM Supermarket.
“TM Supermarket has continued to deliver a strong trading and profit performance in a difficult and complex operating environment,” said the group.
The group’s share of TM Supermarket’s earnings grew 45 percent on last year to R116, 3 million.
Pick n Pay posted a 7, 1 percent rise in full-year earnings on the back of costs-cutting measures and improved productivity in its operations.
Action taken to reduce the group’s operating model included a voluntary severance programme with a once-off severance cost of R250 million.
The South African retailer announced today that its headline earnings per share (EPS) increased to 276, 98 cents in the year to the end of February, from 258, 65c previously.
Turnover growth increased 5, 3 percent to R81, 6 billion (or $6, 85 billion) from R77, 5 billion, while trading profit was up 4, 9 percent.
As at the end of February 2018, the Pick n Pay group had 1 685 stores, including 57 stores held through its investment in TM Supermarket.
The company’s directors declared a final gross dividend of 155, 40c per share.