Key Points:
- South African retailer reports a loss due to store impairments and tough economic conditions.
- Discount chain delivers strong sales growth despite challenges, adding new stores.
- Pick ‘n Pay charts turnaround plan with store closures and focus on efficiency.
Pick ‘n Pay, a leading South African supermarket chain controlled by the wealthy Ackerman family, reported a disappointing first half, weighed down by a 2.8-billion-rand ($153.7 million) impairment on underperforming supermarkets. Persistent load shedding and heightened competition further pressured the Cape Town-based retailer.
The group swung to a pre-tax loss of R837.2 million ($45.89 million) from a profit a year earlier. Net finance charges surged 47.3 percent to R913.1 million ($50.06 million), with diesel costs for generators reaching R396 million ($21.71 million) amid power outages. This limited the company’s ability to run promotional activities.
Pick ‘n Pay’s boxer drives growth despite headwinds
Pick ‘n Pay’s discount chain, Boxer, was a bright spot, delivering robust sales growth of 16.1 percent despite a challenging economic environment. The chain expanded its store network to 454 locations, adding 27 new stores.
CEO Sean Summers acknowledged the tough economic conditions affecting the group’s performance, including load shedding, high inflation, and subdued consumer spending.
He said: “We have about R1.8 billion ($98.5 million) of the writedown for some selected loss-making stores which will be closed or converted to Pick ‘n Pay franchises or Boxer stores under the group’s strategic plan and an R1 billion ($54.72 million) impairment of assets for underperforming stores.”
Despite the challenges, Summers, a seasoned retail leader, has a clear mandate to revitalize the core business. Pick ‘n Pay remains committed to its strategic initiatives focused on cost efficiency and operational resilience.
Pick ‘n Pay charts growth path
The Cape Town-based retailer operates over 2,000 stores across eight African countries. The Ackerman family, including founder Raymond Ackerman and chairman Gareth Ackerman, hold a combined 25.53 percent stake (124,677,238 shares).
Pick ‘n Pay’s first-half performance underscores the significant operational and financial headwinds the group faces. The company’s ability to execute its strategic response will be critical in navigating the current economic climate and achieving sustainable growth.