PG Group, which owns and operates Pavi Shopping Complex in Qormi and Pama Shopping Village in Mosta, as well as Zara and Zara Home as the local franchisee for the international brands, has continued to generate positive results, seeing its profit before tax rise 5.5 per cent to €18.7 million in its end-of-year results.

The group has just published its annual report for the year ended 30th April 2024, reporting a 13.9 per cent increase in total turnover to €198 million.

Turnover in the supermarket and associated retail operations increased by 14.6 per cent, following the sharp increase, amounting to 19.2 per cent, that was also recorded the year before.

PG Group’s directors said that the group maintained its emphasis on containing selling prices, reducing margins on certain core branded products.

“The objective remained that of being able to offer a highly cost-effective entry level product in all major categories, matching in price any other comparable offering on the local market, but without reducing the wider brand choices available for our customers.”

The group reported an increase in footfall in all areas.

Its franchise operations (the Zara and Zara Homes business) recorded a turnover of €32.6 million, representing an increase of 10.4 per cent over the sales of €29.5 million recorded in the previous financial year.

On the cost side, PG Group saw its overall operating, sales, marketing and administration costs rise by 14.9 per cent, partly due to the growth in product volumes handled by the group, as well as to inflationary impacts, particularly on payroll costs.

Operating cost increments, coupled with the pricing strategy adopted by the group in its supermarkets and changes in sales mix, resulted in a drop of 0.7 per cent in the group’s overall gross profit margin, but this reduction was more than offset by the impact of higher sales, leading the group to increase its gross profit by 8.5 per cent to €26.6 million.

The resultant operating profit amounted to €19.96 million, an increase of 5.5 per cent over the figure registered in the previous financial year.

Net finance costs of €1.3 million brought the group’s profit before tax to €18.7 million.

Looking ahead

PG Group reported that sales have continued to increase in the first quarter of the current financial year, with revenues increasing 23 per cent of the same period of the previous year.

Operations were negatively impacted in the initial weeks of the financial year by major roadworks adjacent to Pama Shopping Village, which hindered access to the site, while revenue growth of five per cent was registered across the remainder of the group’s operations.

The group said that its target for the coming year is to once again attain the level of profitability recorded in the financial year to 30th April 2024 (presented above).

The attainment of this target, said the directors, depends in part on macroeconomic events beyond the group’s control, such as global inflation, geopolitical instability and relatively high interest rates.

PG Group is also operating in an increasingly competitive environment, they said, and remains subject to various risks: “In the supermarkets segment there were new market entrants in recent months, and a number of prospective projects have been announced seeking to emulate the successful model operated by the group. A highly competitive environment is also prevalent in the group’s franchise operations. This sector has been impacted by the continued increase in retail outlets, predominantly clothing, including the opening of new large shopping malls.”

The board nevertheless remains confident on the group’s outlook in the years ahead: “The group’s business model is based on the retail of foodstuffs, an essential commodity, and of two franchise brands that offer excellent value for money at affordable prices. It has a strong and experienced management team and adequate financial resources. PG Group remains particularly well placed to weather adverse market conditions.”