Turnover for the Claremont-based Pick n Pay Group for the year ended 28 February 2011 increased 5.9% to R51.9 billion while trading profit margin dropped to 2.7% as a direct result of the reduction in gross profit margin and cost inflation exceeding internal sales price inflation. Pick n Pay and Boxer combined increased turnover by 5.9% and Franklins’ turnover dropped by 3.9% in Australian dollars. Turnover growth has been modest, impacted by a national labour strike at Pick n Pay and customers exercising caution despite the dramatic fall in food inflation and many price decreases. Group like for like turnover is up 2.0% for the year.

CEO Nick Badminton said the past financial year had been the toughest trading year in the Group’s history. “In the past financial year, we undertook a number of significant and challenging steps to transform our business and at the same time we experienced an exceedingly difficult trading environment. This has been a disappointing set of results, within a year of tremendous change and progress on a number of fronts.

“We were presented with a number of challenges in the year under review. The most significant change challenge was tackling Inland consolidation, SAP and supply chain in the biggest part of our business. The learning from Longmeadow has been immense and this will be applied in the roll out of centralized distribution in the years ahead. 

We also had a difficult year with industrial relations, ending with a strike in November – our busiest trading period – and culminating in a three-year wage deal with Saccawu.

“Although our financial results are disappointing, the sheer pace and extent of change in the group has meant that the platform for growth has developed very well, with still more change coming in the years ahead.

Headline earnings per share were 189.35 cents, 18.3% down from last year, with the total dividend per share for the year of 142.50 cents for Pick n Pay Stores Limited and 69.28 cents for Pick n Pay Holdings Limited at 18.3% and 18.4% down on last year, respectively.

“Strategic improvements were also achieved through the year, most notably the full implementation of SAP across the business and the significant work done on its new smartshopper loyalty programme.

“With the roll-out of SAP complete, we are now close to having a fully integrated system across the business, with improved in-store disciplines, more efficient operating processes and more timely information for performance management. Some of SAP’s applications are not yet complete and these will be attended to in the year ahead.

“Pick n Pay will continue its expansion into Africa at a deliberate pace over the next few years. We now have two stores in Zambia and the support from our customers has been extremely pleasing. In 2012 we shall open three more stores in Zambia, three in Mozambique and two in Mauritius.

Franklins has been treated as a discontinued operation and its results have been reflected separately from those of continuing operations. Turnover in Franklins for the year of AUD827.2 million was down 3.9%, with a net loss incurred of AUD18.1 million (excluding depreciation, which is not provided at Group level from the time a business is classified as held for sale).