Pick n Pay outperforming peers Shoprite, Woolworths and Spar in the near term
Pick n Pay trading update shows short term outperformance against peers Shoprite, Spar and Woolworths
Pick ‘n Pay – Trading update
For the 18 weeks ending 3 July 2022, Pick n Pay Stores has guided the following (vs prior year’s comparative period):
- Group sales up 10.7%
- South Africa sales up 10.5%
- Internal sell price inflation of 5%, below 7.1% Consumer Price Inflation for food nationally
- Liquor sales increase 17.2%
- Clothing sales increased by 17.1%
- Online sales up 97%
Comments on results
Pick n Pay have produced a robust set of results with a strong performance in both the liquor and clothing segments. Online sales are showing great traction, albeit from a relatively low base.
The civil unrest in July 2021 will provide a lower base of comparison which will inflate this year’s earnings in future updates. 763 Pick n Pay stores were closed in July 2021 with 67 stores still having remained closed in August 2021.
Food sales appear to be market leading although the group’s attempts to mitigate cost pressure could be eroding earnings margins somewhat. Cost pressures remain for the group in the form of utilities, fuel, interest rates as well as the funding of Boxer and clothing store rollouts.
Performance year to date
In terms of total returns for the year to date, which include capital gains and dividends, Pick n Pay Stores has outperformed its peers Shoprite, Woolworths and Spar.
Peer valuations
RIC |
Company name |
Trailing P/E LTM |
Forward P/E FY1 |
Dividend yield latest (%) |
pikj.j |
22.69 |
17.79 |
3.86 |
|
Peer average |
18.89 |
15.97 |
3.59 |
|
SHPJ.J |
23.67 |
20.33 |
2.62 |
|
WHLJ.J |
17.44 |
14,59 |
2.69 |
|
SPPJ.J |
11.75 |
11.16 |
5.20 |
|
Pick n Pay currently trades at premium to its peers Woolworths and Spar in terms of historical and forward price to earnings (PE) multiples, while trading at a marginal discount to Shoprite Holdings.
The group’s historical dividend yield remains at a premium to peers Shoprite and Woolworths and marginally lower than that of the Spar Group.
Pick n Pay – Technical view
The share price of Pick n Pay remains in a broad range trading environment. Circled blue we see a bearish price reversal from overbought territory. The price has since moved to test our support target of 5535, guided in Wednesday’s (27 July) market update webinar.
Traders who are short might consider trailing their stop to a close above a one day high. We are looking for a close below 5535 to unlock further decline with 5215 (range support) the next downside target to consider.
This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only
