Tough trading likely to continue: Pick n Pay

"As with previous years‚ these and other factors have combined to make a difficult trading year and they are likely to continue in the medium term‚" Ackerman said at the retailer's AGM in Cape Town.

The beleaguered grocer is trying to get its house in order after facing a barrage of criticism for its lacklustre performance over the last few years.

"The company took its eye off the ball many years ago in a number of areas‚ notably in general merchandising‚ when it stopped the rollout of its Hypermarket chain ... they also ignored the global trend towards centralised distribution‚ and as a result are now running a marathon at a sprinter's pace in order to make up for lost time," Chris Gilmour‚ analyst at Absa Asset Management Private Clients said.

Although Pick n Pay has made sizable investments in its loyalty programme‚ centralised distribution system and a specialist category buying function to improve operating efficiencies‚ it is believed that the group's problems are deep-seated and 2014 will be the earliest before any meaningful sustained improvements are manifested in SA's second largest retailer.

According to Ackerman‚ the company is on the road to recovery.

"After several years of extremely difficult trading conditions‚ often traumatic restructuring and very considerable capital expenditure‚ Pick n Pay is showing signs of the green shoots coming through‚ which has been our goal since we launched on our ambitious transformation programme‚" he noted.

But he added that it was not an "easy or risk-free" journey and there was still much to be done before the group could claim to have achieved all that it set out to accomplish.

Pick n Pay is aiming for more than 50% of total company grocery distribution to be centralised‚ by the end of February 2014.

Last month‚ it opened its second distribution centre‚ following the launch of its distribution warehouse in Longmeadow‚ Gauteng‚ in 2010.

The opening of the distribution centre in Philippi‚ Cape Town‚ forms part of the rollout of four sizeable distribution centres around the country‚ with a total investment of R2 billion.

By February this year‚ the total number of Pick n Pay stores outside SA - both owned and franchised - was 94.

The company opened three new stores in Zambia during the year‚ as well its first in Mozambique and first two in Mauritius.

"We have three openings planned for 2013 - in Mozambique‚ Zambia and Mauritius. We increased our stake in TM to 49% and the first Pick n Pay store in Harare opens next week‚" Ackerman said.

He commented that during the past year‚ the protracted international financial crisis had continued to threaten SA's tentative economic recovery.

"This is complicating our ability to create jobs‚ restore consumer confidence and kick-start necessary economic growth. It is also compounded by domestic issues such as poor productivity‚ public policy uncertainty and severe crises in education‚ health and agriculture‚" Ackerman said.