Pick ‘n Pay excited by improvement at Franklins

Posted by Daniel Palmer on 24th April 2009

South African based supermarket group Pick ‘n Pay has reported a significant turnaround in the operations at their Australian chain – Franklins.

The grocer, which operates over 80 stores throughout the state of New South Wales, reaped a trading profit of R23.5 million ($3.7m) before capital profits for the year ended February 28, a marked turnaround from last year’s loss of just under A$5 million in Australia. Turnover grew by around 18% in South African Rand terms and 3.5% in Australian dollar terms.

The stark improvement at Franklins, which Pick ‘n Pay acquired in 2001, was driven by increased operating efficiencies and double digit turnover growth from refurbished stores.

“The success of the 11 fully refurbished stores in the current year is not only producing good turnover growth and increased profitability but is also starting to open doors with landlords for prospective new stores,” Pick ‘ Pay advised. “During the 2010 financial year we will complete another 14 store refurbishments.”

Pick ‘n Pay CEO Nick Badminton was delighted with the improvement shown in Australia and believes there could be more continuity in profits in the years ahead.

“I think Aubrey [Zelinsky – MD in Australia] and his team, if you look at it, they have put in SAP, they’ve got a great distribution now,” he told South African radio (SAfm). “It’s taken some time and last year he embarked on a programme of starting to refurb stores. We had Franklins as a no-frills – basically it had no service areas, and he’s starting to put service areas into the stores in the revamps, and he’s grown those refurb stores in double-digit growth.”

“So he’s very happy with what’s been achieved, and now we’ve got another 11 stores planned. Three stores about to finish, and another 11 this year.”

Franklins reported they had discovered a more value-conscious consumer in the past year, with sales of private label and discounted goods stronger than ever.

“Our discount supermarket model has proven resilient in this challenging economic environment, reflected in the strong growth in profitability,” Mr Zelinsky said, according to The Australian. “This has been an ideal time to invest in store infrastructure, with more than $25 million invested so far in returning our stores to a more traditional supermarket format with a greater fresh product component.”
Pick n Pay Chairman, Raymond Ackerman, added that the South African food retailer, which reported a 13.4% rise in group profit, was bullish about the future of their Australian operations.

“We are delighted by the outstanding turnaround achieved by Franklins which has now established a solid foundation for long term growth in Australia,” he concluded.