Shoprite’s latest financial results show it continues to win market share, while Pick n Pay struggles to show real growth.
Shoprite reported sales growth of 17.8% for the financial year that ended July 2023, increasing from R188 billion to R220 billion.
Checkers stores achieved an 18% increase in sales. Its online sales through its well-known Checkers Sixty60 grew by 81%.
Profit growth was not as strong as revenue growth. Net profits from operations increased 3% while total comprehensive profits contracted from R8.6 billion to R4.0 billion.
This decrease was driven primarily by a significant R1.7 billion foreign exchange loss, while the previous period experienced a gain of nearly R3 billion.
In comparison, Pick n Pay’s sales only increased by 9% from R97.9 billion to R106.6 billion for the year ended February 2023.
Pick n Pay’s net profits took a knock during the reporting period, decreasing by 19% from an operational point of view.
Employee expenses were the fastest-growing line item on Pick n Pay’s income statement, growing by 8% from the previous period.
Pick n Pay has implemented a strategy called the Ekuseni customer value proposition aimed at increasing its growth.
The strategy mainly revolves around converting a large number of its stores to fall under the Qualisave banner to cater to low and middle-income households.
Another core part of the Ekuseni strategy is modernising store layouts to better serve customers and grow online sales.
To date, Pick n Pay’s strategy has not made a big impact on its results. However, it is still early days and may deliver on its promise in the future.
Shoprite versus Pick n Pay
Comparing the 5-year historical revenue and net profit growth rates shows that Pick n Pay has lagged behind Shoprite since 2020.
The average 5-year growth rate in sales of Shoprite was 7.4% compared to Pick n Pay’s 5.49%. Shoprite’s 5-year net profit growth rate was 4.1%, far higher than Pick n Pay’s 0.6%.