Despite delivering positive sales growth, Pick n Pay yesterday said it had spent nearly R350 million year-on-year on diesel to run generators in the first 10 months of its year in a bid to counter load shedding.
Pick n Pay its trading update for the 43 weeks ended December 25, 2022, said it spent an additional R346 million year-on-year on diesel to run generators at stores in the first 10 months of the year, with the costs, concentrated over the latter months, and was currently on a run rate of approximately R60m per month, depending on the stage of load shedding experienced.
“In addition to the above, the group is experiencing increased generator repairs and maintenance costs and some additional food waste costs,” it said.
The group said the ongoing crisis in national electricity generation is having a profound impact on every part of society and the economy.
“All Pick n Pay and Boxer stores have backup power and are operational throughout load shedding. However, severe load shedding creates significant challenges. Customer demand is dampened as a result of the disruption, inconvenience, and concern that food may spoil due to interruptions to power at home,” it said.
The production of food and other goods was disrupted, creating stock challenges.
“Diesel generators are not designed to run for many hours on end and suffer breakdowns,” it said.
Pick n Pay said it had more recently had to contend with a significantly more difficult trading environment, with unprecedented load shedding and a further downturn in the economy.
“Our priority has been to provide uninterrupted service for customers in our stores, whatever the level of load shedding. Inevitably, load shedding has disrupted customers, with some impact on turnover. Of greater consequence, however, is the substantial unplanned costs incurred in running localised power generation for stores,” it said.
Pick n Pay said it was also look at installing inverters and battery power solutions to operate supermarkets sustainably, among other plans.
“It is clear that progress will not be rapid. The group, therefore, takes the view that the current crisis is a permanent new reality, requiring a rapid, determined and concerted response.
“The government needs to come forward with a sustainable plan to solve the electricity crisis, including by taking every step possible to ease the way for businesses to generate and use their own sustainable energy,” it said.
Its rival Shoprite, last week, in its operational update for the six months ended January 1, 2023, also raised the spectre of load shedding and said to operate generators across its South African supermarkets’ store-base to trade uninterrupted during load shedding Stages 5 and 6, had amounted to R560m for the period.
Pick n Pay also reported that group sales for the first 10 months of the 2023 financial year increased by 9.3%.
South Africa sales growth for the 10 months was 9.0%.
The group’s Rest of Africa segment increased sales for the 10 months by 17.0% (9.0% on a constant currency basis).
Pick n Pay South Africa sales grew 4.5%, 3.8% like-for-like, in the 43-week period, and 3.2%, 2.8%, like-for-like, for the 17-week period. Sales growth in the 17-week period was impacted by a stronger base, lesser civil unrest impact in the base compared to the first half of the year, and 11 lost liquor trading days in the base against 55 in the first half), as well as an increase in CVP store upgrades and store, revamps (26 during the period).
Boxer South Africa’s sales growth was 20.7% for the reported period.
BUSINESS REPORT