Retail group Pick n Pay said on Tuesday 1,400 staff members had accepted voluntary severance packages. This is due to the financial impact of the Covid-19 pandemic and isolation period on operations.
Pick n Pay said that although retrenchments were already imminent before the Covid-19 pandemic, some of the segregation regulations, such as the restrictions on the sale of liquor and cigarettes, negatively affected its profit margin and sales.
This retail group also slammed the government over the continued ban on the sale of tobacco products and alcohol that could potentially contribute to these retrenchments.
Gareth Ackerman, chairman of Pick n Pay, said at the trade group’s annual general meeting that he would appeal to the government to review its decision on the ban on the sale of tobacco products and alcohol. About 800 small-scale brewers are already facing bankruptcy and the South African Breweries (SAB) has canceled investments worth R5 billion due to income losses.
“We still do not see the government doing anything about the ban, despite all the empty promises that they will listen to the citizens’ requests and consider them. Businesses cannot afford poor decisions on the part of the government at this stage. We also demand a good explanation as to why they make these decisions, ”says Ackerman.
Ackerman describes the reasons given by the government for the continued ban as confusing and contradictory. “Regardless of the government’s motives for this decision, it merely creates cynicism and further division among citizens.”
According to the government, the ban has been introduced to prevent South Africa’s health services from being overwhelmed by alcohol-related trauma cases and smokers with severe Covid-19 symptoms.
The trading group said in a separate statement that the necessary security measures it had put in place in its stores across the country had a further impact on its profits. The measures include the restriction on the number of customers per store, the temporary closure of stores after staff members have been infected and the restrictions on the sale of certain goods.
The sale of certain products, such as clothing, general merchandise, hot food, alcohol and tobacco products, which were banned at the beginning of the isolation period, represents 20% of the trading group’s revenue and is sold at higher profit margins.
The trading group informed its shareholders in May that its core earnings per share for the year would be lower. Ackerman said the company will review this forecast again later this year.