TM Pick n’ Pay profit bulks to $2,4bn

Retail chain — TM Pick n Pay’s profit for the year to March 31, 2022 more than doubled to $2,4 billion as sales volumes improved helping lift parent company — Meikles Limited’s earnings.

Meikles chairman, John Moxon, attributed the solid performance to increased trading following relaxation of Covid-19 restrictions.

The prior comparable year was affected by Covid-19 restrictions that resulted in reduced trading hours.

“The lifting of most of the Covid -19 trade restrictions and our tactical marketing campaigns led to the growth in sales volume over prior year.

Our ability to constantly replenish stocks throughout all the branches demonstrated the versatility of our supply chain and logistics networks,” said Moxon in a performance update for the group – Meikles Limited.

Revenue grew by 36 percent to $66 billion. According to the group, the sales growth was due to an increase of 26 percent and 11 percent in units and customer transactions respectively.

At $2,8 billion, operating profit increased by 54 percent from $1, 9 billion in the previous year on the back of strategic investment in stocks, margin control and cost saving initiatives. Operating expenses linked to exchange rate movement pricing led to a surge in costs over prior year.

“Management constantly re-aligned strategies to cushion the business from inflationary pressures during the period,” said Moxon.

The operating profit margin firmed up to 4,3 percent from 3,8 percent in prior year.

The segment’s liquidity remained strong. It generated sufficient cash flows from operating activities to fund $1,8 billion branch refurbishments and $900 million dividend payout to the shareholders. The group refurbished stores in Newlands, Makoni and Zengeza.

Overall, Meikles’ revenue for continuing operations, grew by 34 percent to $66 billion from $49, 1 billion in 2021 primarily driven by the increase in sales units at the supermarket segment — TM Pick n Pay.

Gross profit margin increased by 2 percentage points to 25 percent from 23 percent in the previous year. Inflationary pressure on operating costs offset the increase in the gross profit margin and as a result the operating profit margin was maintained at 3 percent.

Operating profit for continuing operations was $2, 2 billion, up 48 percent from $1,5 billion in the prior year.

Figures from the group show profit after tax for continuing operations (excluding profit on distribution of subsidiary) grew by 461 percent to $3,4 billion from $599 million the previous year.

Other comprehensive income increased to $3 billion from $843 million in the previous year, of which $1,9 billion is attributable to the uplift of the fair value of 35 percent investment in Mentor.

Total comprehensive income increased to $5,8 billion from $1,8 billion, of which $4,6 billion (79 percent) is attributable to owners of Meikles and the remaining balance of $1,2 billion (21percebt) to minority shareholders.

Revenue from hospitality segment increased to US$2,9 million from US$342,000 last year. The group’s investment in hospitality has now been reduced to a single operation.

Room occupancy for the year grew to 16,77 percent from 2,45 percent last year due to the easing of both local and international COVID-19 stringent travel restrictions during the second half of the financial year.

Profit after tax improved to $196 million from a loss of $212 million in the previous year. Meanwhile, the first phase of The Victoria Falls Hotel refurbishment was at an advanced stage at the end of the reporting period. The refurbished rooms are scheduled to open for bookings by the end of August 2022.

The group declared a final dividend of 100 cents and 0,1725 US$ cents per share, taking the total dividend for the financial year to 280 cents and 0,1725 US$ cents per share, inclusive of two interim dividends of 80 cents and 100 cents.-ebusinessweekly