Pick n Pay Stores Limited
Incorporated in the Republic of South Africa
Registration number: 1968/008034/06
JSE Share Code: PIK
ISIN code: ZAE000005443
(“Pick n Pay” or “the Group”)


Leadership change, Trading update, and further trading statement for the 26 weeks ended 27
August 2023

Sean Summers to replace Pieter Boone as CEO

The Pick n Pay Board and Pieter Boone have agreed that Pieter will step down from his position as
Chief Executive Officer effective 30 September. Sean Summers, a Pick n Pay veteran who ran the Group
as MD and CEO for 11 years, will replace Pieter with immediate effect.

Chairman Gareth Ackerman commented:

   “I want to thank Pieter for his dedication to Pick n Pay over the past two-and-a-half years. He
   became our CEO while the Covid pandemic was still raging, and has led the business through some
   extraordinary challenges, including the transition out of the Covid lockdown, the unprecedented
   civil unrest in 2021, and the current loadshedding crisis. Despite this, he devised and led the launch
   of our Ekuseni strategic plan, overseeing the very pleasing acceleration of our Boxer, Clothing and
   Omnichannel growth engines, and launching our new QualiSave brand.

   “Unfortunately, in a very difficult environment, the performance of our core Pick n Pay business
   has been very challenging over the past months, and has not met expectations. Pieter accepts that
   the Board has decided on a change in leadership. He leaves us with our heartfelt thanks and best
   wishes for the future.”

Sean Summers worked previously for the Group between 1974 and 2007, rising to become Managing
Director in 1996, and CEO in 1999. He left the Group in 2007. He has a unique understanding of the
business and South African grocery retailing. During his tenure, Pick n Pay was the clear grocery market
leader in South Africa.

Over the coming weeks, Sean will relocate physically to South Africa, and will spend time analysing
the business and meeting staff and customers. Gareth Ackerman, chairman of the Pick n Pay Group,
said: “We are delighted that Sean is coming back to Pick n Pay. His knowledge and experience are
unrivalled. He is passionate about getting Pick n Pay back on to the right trajectory, and winning the
trust and confidence of customers new and old. He is absolutely the right person for the job at this
time”.

Said Summers: “I am very excited to be coming home to Pick n Pay. Retailing is my passion, and this
company is in my blood. I have great excitement and energy for the task ahead. I look forward to
leading the Group back to the position it deserves.”
Trading update

The Group experienced a particularly challenging H1 FY24 (26-week period ended 27 August 2023),
driven by a weak consumer environment, loadshedding costs, and heightened competitive intensity.
Continued strong sales momentum in the Ekuseni growth drivers of Boxer, Online and Clothing was
offset by muted sales growth in Pick n Pay SA supermarkets, gross profit margin pressure, and load
shedding cost pressures. While Boxer managed to withstand the combined impact of these pressures,
the impact on Pick n Pay SA supermarkets was significant.

Group sales

The Group achieved a pleasing uptick in South African and Group sales momentum over the latter six
weeks of the period, versus the initial part of the period (20 weeks to 16 July, as previously reported).
Group sales for H1 FY24 increased 5.4%. South Africa sales growth for the period was 5.1% (1.8% like-
for-like), while the Group’s Rest of Africa segment sales increased 14.4% (12.2% on a constant currency
basis).

•     Pick n Pay SA grew H1 FY24 sales 0.3% (0.8% like-for-like) as lower levels of loadshedding in the
      latter part of the period allowed Pick n Pay to re-intensify its promotional programme.
      Consequently, sales growth for the latter six weeks of the period was 2.4% versus the -0.3%
      previously reported for the first 20 weeks.
•     Boxer SA grew H1 FY24 sales 16.1% (4.2% like-for-like), as Boxer extended the strong sales
      momentum shown in the earlier part of the period.

Clothing sales in stand-alone stores grew 13.8%, while Group liquor sales for the period grew 9.6%.
Online sales growth for the period grew 76.3%, driven primarily by growth in our on-demand platforms
Pick n Pay asap! and Mr D.

South African H1 FY24 internal selling price inflation was 8.3%, well below Statistics SA Food CPI of
11.4% for the period, as the Group maintained its commitment to delivering low prices to consumers.

                                                               26 weeks ended 20 weeks ended
                                                               27 August 2023 16 July 2023
                                                               % growth       % growth
    Pick n Pay SA sales                                              0.3%           -0.3%
    Boxer SA sales                                                  16.1%           15.4%
    SA total sales                                                   5.1%            4.4%
    Rest of Africa sales                                            14.4%           15.9%
    Group turnover                                                   5.4%            4.8%


Trading statement

Shareholders are referred to the announcement released on the Stock Exchange News Service on 19
July 2023, wherein the Group advised that it expected to report a loss at the earnings, headline
earnings, and pro forma headline earnings levels for H1 FY24. At the time, the Group also advised that
the expected loss was primarily due to restructuring costs, duplication of supply chain costs due to the
Longmeadow / Eastport Distribution Centre handover, and net incremental energy costs due to
loadshedding.

Pick n Pay is in the process of finalising its financial result for H1 FY24, and is thus in a position to
further update investors. The Group now expects incremental abnormal costs for H1 FY24 of
approximately R565 million, consisting of:
•     Total diesel costs to run generators of R396 million, and net incremental energy costs of R190
      million;
•     R116 million duplication of supply chain costs during the Longmeadow / Eastport handover;
•     R259 million of employee restructuring costs, primarily due to the Voluntary Severance
      Programme (VSP) and Junior Store Management restructuring which were concluded during the
      period. The Group expects to realise approximately R300 million of annualised on-going cost
      savings from these Project Future initiatives.

The previous trading statement guided that the Group did not expect to report an H1 FY24 loss
excluding incremental abnormal costs. We now advise that the Group no longer expects to make a
profit excluding these costs. The more negative performance relative to the Group’s previous guidance
is due to gross profit margin for the period being below our previous expectation. This was a
consequence of a highly promotional trading environment, which impacted both sales growth and
gross margin, and included the impact of supplier incentive income for the period being finalised at
below our previous expectation.

Management expects to face continued headwinds in the latter half of the year, but anticipates the
H2 FY24 earnings outlook to be materially stronger than H1 FY24, driven by (a) more supportive
earnings seasonality, (b) net incremental energy cost growth to be relatively low (given the high H2
FY23 base), (c) non-repeat of supply chain cost duplication, and (d) efficiency gains from the H1 FY24
Project Future initiatives beginning to contribute.

The Group’s balance sheet remains strong. Group net debt at period end was R3.8 billion vs. R3.7
billion at 26 February 2023. The stable gearing was primarily the result of strong working capital
management and prudent capital allocation during the period.

The Group expects its H1 FY24 earnings to fall within the following ranges:

                                                                           26 weeks to                  26 weeks to
                                                                        27 August 2023               28 August 2022
                                                                        Expected range                     Reported
                                                                        Cents per share              Cents per share
    Reported earnings metrics
    (Loss)/earnings per share (EPS)                                 -98.18 to -79.31                              94.34
    Diluted EPS                                                     -97.93 to -79.08                              94.23
    Headline (loss)/earnings per share (HEPS)*                     -149.36 to -129.82                             97.73
    Diluted HEPS                                                   -148.97 to -129.45                             97.62
    Pro forma earnings metrics**
    Headline (loss)/earnings per share (HEPS)                      -139.52 to -121.77                             88.76
    Diluted HEPS                                                   -139.17 to -121.44                             88.66
*The H1 FY24 difference between EPS and HEPS is partially attributed to a capital profit from the sale of the Longmeadow
Distribution Centre
**H1 FY23 pro forma earnings exclude R145.2 million (R104.5 million net of tax) business interruption insurance proceeds
received and accounted for in that period, but previously included in FY22 pro forma earnings. In-line with normal Group
practice, pro forma earnings also exclude all non-cash hyperinflation gains and losses related to the Group’s TM business in
Zimbabwe. The Group has not added back any of the R565m incremental abnormal costs for the purposes of calculating the
pro forma earnings metrics. Pro forma HEPS is the Group’s primary measure in determining its dividend pay-out ratio.



Final result announcement
Shareholders are advised that the Group plans to release its financial results for the 26 weeks ended
27 August 2023 on SENS just after 7:05am on Wednesday 18 October 2023. An in-person and online
presentation will follow at 9:00am, the details of which will be shared in due course
The slides accompanying the result presentation will be available on the Pick n Pay Investor Relations
website at www.picknpayinvestor.co.za shortly before the commencement of the presentation.

Pro forma information
The pro forma financial information is presented in accordance with the JSE Listings Requirements and
is presented for illustrative purposes only. The pro forma financial information may not fairly present
the Group’s financial position, changes in equity, results of operations or cash flows.

The constant currency sales growth information contained in this announcement has been presented
to illustrate the impact of changes in the Group’s major foreign currencies - namely the Zambian
kwacha and the Botswana pula - on the sales growth of its Rest of Africa segment. The Group’s
turnover growth in constant currency is calculated by translating the prior period local currency
turnover at the current period average exchange rates on a country-by-country basis and then
comparing that against the current period turnover translated at current period average exchange
rates.

The financial information on which this trading update is based is the responsibility of the Board of
directors of the Group and has not been reviewed by or reported on by the Group’s external auditors.


By order of the Board
Cape Town
2 October 2023                                 Sponsor: Investec Bank Limited