South Africa's Pick n Pay Hit By Energy, Store Revamp Costs

By Dayeeta Das
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South Africa's Pick n Pay Hit By Energy, Store Revamp Costs

Pick n Pay, South Africa's second-biggest supermarket chain, reported a 16.3% fall in annual earnings on Thursday, hit by costs related to store revamps and unprecedented power cuts.

State electricity utility Eskom is implementing the worst rolling blackouts on record, leaving households in the dark for up to 10 hours a day, disrupting manufacturing and hurting businesses.

Retailers specifically are having to crank up diesel generators to power their stores and warehouses, additional costs that are putting pressure on margins.

Energy Costs

Pick n Pay said it spent an additional 522 million rand (€26 million) on diesel to run generators in the year.

As a result, annual pro-forma headline earnings per share (HEPS) fell by 16.3% to 242.37 cents.


Chief financial officer Lerena Olivier told investors the earnings outlook for the financial year to February 2024 will largely be driven by diesel costs, increased financing costs and the extent of power cuts, offset by cost saving initiatives.

Pick n Pay plans to further invest in energy-efficient LED lighting, in-store battery energy storage and automated controls that can switch off some equipment during blackouts.

It is also negotiating with landlords to install more solar power, which it hopes, along with the other measures, will save 200 million rand (€10 million) on diesel costs over the year.

"No company can absorb these costs indefinitely given the scale of the investment needed to keep the power on and stores open," chairman Gareth Ackerman cautioned.


Pick n Pay's selling price inflation was 8.5% versus 2.9% in the prior year, partly helping to increase group turnover by 8.9% to 106.6 billion rand (€5.3 billion).

Read More: South Africa's Shoprite Rebrands Wholesale Supply Business

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