Pick n Pay losses widened in the six moths to August 25, but its management has predicted a much improved second half. Picture: Supplied.
The Pick n Pay Group is making “encouraging progress” on its turnaround, including a forecast 50% full-year decline in trading losses from its core Pick n Pay Supermarkets segment, and the worst of the group losses were behind it, CEO Sean Summers said yesterday.
South Africa’s second biggest grocery chain’s loss for the 26 weeks to August 25 widened 44.8% to R827.4 million and the headline loss per share weakened further by 16.3% to 136.60 cents, down from 117.48 cents.
Group turnover was higher by only 3.7% to R56.1 billion.
A turnaround strategy is underway that included a recapitalisation by way of rights issue and the proposed listing of Boxer, as well as the closure or conversion of some loss-making stores.
“Exactly a year ago, when I re-joined Pick n Pay, I predicted this (the turnaround process) would be a multi-year journey and that it would get worse before getting better. Our earnings for the first half reflect this, and I am confident that the worst is behind us now,” Summers said.
He said in a telephone interview the group still had some 25-30 non-profitable stores to deal with in the second half and he expected the group would benefit from cost reductions in the second half. Black Friday and Festive Season trading were expected to be major drivers of second half earnings, he said.
There had been a shift in like-for-like sales growth at the core Pick n Pay Supermarket stores, which had increased from -0.5% in the previous period to 3.1% in the first half, indicating signs of turnaround driven by the strengthened management team.
Fifty-three company-owned and franchise stores were closed since February 2024, offset by the opening of 39 new stores, 12 of them were Boxer stores - bringing net closures to 17. Summers said some stores initially identified for closure had become profitable through improved management measures.
“We are steadily progressing to a better performing and more profitable store estate by closing loss-making stores, converting stores to franchises, or to Boxer. Our estate is starting to make a great deal more sense,” he said.
“We will also open several new Supermarkets before the end of the calendar year,” said Summers.
Apart from the better performance of Pick n Pay supermarkets, the showed the discount grocery chain and soon to be listed Boxer put in another strong performance, and there was also continuing strong sales growth in Pick n Pay Clothing and Pick n Pay Online.
Summers said “we are quietly confident” that trading losses would reduce in the Pick n Pay segment from the R1.5bn trading loss last year. Group second half results would also benefit from lower interests costs, following lower debt due to the recapitalisation efforts.
Group turnover grew 3.7% to R56.1bn, with like-for-like sales growth of 2.9%. Boxer's sales increased 12%, with a like-for-like sales increase of 7.7% and sales from new stores increasing by 4.3%. Boxer's trading profit was up 16% year-on-year.
He said the shift at Pick n Pay supermarkets reflected more competitive pricing and enhanced product ranges, including reinstating over 3 000 products, “and extending the private label offer”. Lower load shedding costs were invested into lower prices for essential items, and keeping internal inflation at 3.4%.
Pick n Pay Clothing reported 9.8% sales growth and an additional 10 new stores in the half. Online sales also saw impressive growth of 60.6%, driven by enhancements to the Pick n Pay asap! app, faster picking and delivery times and an expanded footprint to 550 locations.
The 106% oversubscribed rights offer, as part of a two-step recapitalisation plan, raised R4bn in new capital. In addition, the Boxer IPO would further strengthen the balance sheet,.
“Our focus this year has been strengthening our balance sheet, as well as implementing the turnaround plan. Once our capital is in place, we can also start investing in refurbishing Pick n Pay stores and opening new ones,” he said.
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