Pick n Pay struggles with sales amid store closures but shows glimmers of hope.
The slow sales growth is attributed to the closure of 16 stores during the period, including four corporate stores and 12 franchise stores.The company’s performance has been underwhelming, particularly in its company-owned supermarkets in South Africa, which have underperformed in recent years.
However, the new management team’s turnaround plan has shown early signs of progress, with like-for-like sales increasing from -0.5% to 3.6% in this segment. Pick n Pay Hypermarkets have also returned to positive sales growth after a period of underperformance.Despite these positives, the franchise supermarkets in South Africa have experienced a decline in like-for-like sales, which remains a key priority for the retailer.
The company’s latest trading update, covering the 26-week period ending August 25, 2024, marks the halfway point of its 2025 financial year. This update reveals a decline in earnings per share (EPS), headline earnings per share (HEPS), and comparable HEPS of more than 20%.
This is in line with the expectation of CEO Sean Summers, who warned that the company’s situation may worsen before it improves.The Group expects the Boxer segment’s trading profit to show positive year-on-year growth, but the Pick n Pay segment’s trading profit is expected to decline year-on-year, dragging down the group’s trading profit.
The company is unable to provide a specific forecast for EPS and HEPS due to current uncertainties. Although earnings are expected to decline, Pick n Pay anticipates a substantial improvement in full-year profit/loss before tax and capital items.
The successful conclusion of the R4 billion rights offer in early August strengthened its balance sheet, and inventory levels remain well managed within the Pick n Pay and Boxer segments. The focus is now on the second step of the recapitalization program, with the planned IPO of the Boxer business on track.
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