Pick n Pay says South Africa’s alcohol and tobacco bans cost it R4 billion in sales

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Pick n Pay has released an update on its activities and results, with the group currently finalizing its financial results for the 52 weeks ending February 28, 2021.

The distribution group said it was satisfied with its financial performance in a “difficult year”, with revenue growth of 4.3% over the period.

He spoke about its business performance in the main food and grocery offering in South Africa, accelerating growth from 9.9% (7.6% like-for-like) in the first half to 10.1% (9 , 3% like-for-like). in the second half.

However, he noted that sales of some items, including tobacco and alcohol, have suffered a severe blow due to government lockdown restrictions.

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“Group sales growth of 4.3% (3.1% like-for-like) was significantly affected by bans on the sale of alcohol and other products during significant parts of the business year , which resulted in an estimated loss of sales of R 4 billion ”It said.

Pick n Pay said it lost 209 alcohol trading days in the year – 126 days in the first half and 83 days in the second – with reduced trading hours for all but three weeks of the year.

This follows the ban on the sale of cigarettes and other tobacco products between March 27 and August 17.

Taken together, these measures had a profound impact on alcohol and tobacco sales in South Africa, with negative growth of 31% over the year, he said.

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He added that Covid-19’s trade restrictions disproportionately affected higher-margin categories, including:

  • Alcohol;
  • Clothing;
  • General merchandise;
  • Hot food;
  • Delicatessen products;
  • Bakery products.

“While this had a negative impact on the total gross profit margin, the group expects this to have been offset by improvements in its business operations and supply chain,” he said. .

“Sales were also affected by the reduction in trading hours, limits on the number of customers in stores to meet physical distancing requirements and by some temporary store closures following the identification of positive cases of Covid-19 among the staff. “

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Pick n Pay said its operating expenses would also reflect the R200m costs directly related to the Covid-19 group’s operational response: R50m in the first half and an additional R50m in the second half.

Additional safety and health measures cost R30 million; a R50 million appreciation bonus was paid to frontline staff in the first half of the year; and the security and communication costs added an additional R20 million, he said.

Full Pick n Pay results will be released on April 21, 2021.


Read: New research highlights key loopholes in South Africa’s alcohol lockdown bans

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