Pick n Pay goes from zero to hero

Cobus Potgieter, Chief Investment Officer and Portfolio Manager at SouthernCross Capital, said that Pick n Pay at current levels offer a good buying opportunity.

What makes this statement noteworthy is that Potgieter has been bearish on Pick n Pay for a long time, questioning the turnaround story and its leadership team.

In August 2025, Potgieter said that Pick n Pay was a dying animal, which was slowly losing ground against its competitors, like Checkers.

He explained that the market viewed Pick n Pay as worthless, or even negative, given the retailer’s significant challenges.

Pick n Pay investors were exposed to heavy operational drag, execution risks, and a long timeline before the core supermarkets reach cash-flow break-even.

“As tough times hit, it will sell a bigger and bigger stake in Boxer to prop up the struggling Pick n Pay Stores business,” Potgieter said.

“I am usually a guy who loves these opportunities. However, I don’t believe in the team with Sean Summers to turn Pick n Pay around.”

Simply put, he raised concerns that Pick n Pay would be forced to treat Boxer as a piggy bank to subsidise its failing corporate stores.

Potgieter was proved right. On Tuesday, 19 May 2026, Pick n Pay announced that it had sold another 12.5% of Boxer’s shares for R4.7 billion.

Following the sale, Pick n Pay will hold approximately 53.1% of Boxer’s total issued ordinary shares, down 11.5%.

Pick n Pay said it will deploy the R4.7 billion from the sale to support the ongoing implementation of its turnaround plan and growth strategy.

It added that the money will also help Pick n Pay to achieve the maximum financial flexibility over the medium term.

Pick n Pay goes from zero to hero

Over the last few months, Pick n Pay has been trading at a significant discount to its stake in Boxer.

Before trading started on Tuesday, 19 May 2026, Boxer had a market cap of R40.5 billion on the Johannesburg Stock Exchange (JSE).

This means that Pick n Pay’s 65.5% stake was worth approximately R26.2 billion. However, its market cap was only R16.6 billion.

This means that the market viewed Pick n Pay as less than worthless, with a negative value of approximately R10 billion.

Many analysts, even those who are bearish on Pick n Pay’s prospects, viewed this as too harsh an assessment.

Keith McLachlan, chief executive at Element Investment Managers, is one of the investment specialists who think Pick n Pay offers a good opportunity.

“If you buy Pick n Pay shares, you are getting paid a R10 billion discount on Boxer’s fair value, assuming Pick n Pay’s stores are worth zero,” he said.

He added that Pick n Pay has a fair amount of cash on the balance sheet, which further makes the retailer a good investment option.

Many market players agreed with McLachlan’s view, and the Pick n Pay share price rallied 17% in a week.

However, investors did not like the news that Pick n Pay was selling more Boxer shares, and both retailers’ share prices plummeted on Tuesday.

Pick n Pay’s share price lost 5% of its value after the JSE trading started, and Boxer’s share price was 4.5% lower.

Cobus Potgieter’s view on Pick n Pay

The retailer’s valuation was so low that Potgieter, who had previously viewed Pick n Pay as a short opportunity, now sees it as a buy.

He explained that Pick n Pay is essentially back from the dead. “The recent sell-off relative to its Boxer holding has just become entirely unreasonable,” he said.

“The market put an enormous negative equity value on it. We do tend to backfill the narrative when we see significant stock price movement.”

Potgieter explained that, ultimately, Pick n Pay is priced for bankruptcy. However, in his view, the company still has valuable assets.

Potgieter predicts that Pick n Pay will continue to sell off its Boxer stake to bolster its balance sheet and keep investing in what is essentially a dying business.

“The market tends to extrapolate the past too aggressively and assumes there won’t be proactive action to mitigate that,” he said.

He explained that he is not a big fan of Pick n Pay chief executive Sean Summers. “However, he won’t be there forever,” Potgieter said.

“At some stage, they will reach the level of consolidation where they more aggressively right-size the business.”

He said the labour process they have started is a signal that Pick n Pay is getting to the point of taking action.

“They seem to understand that the number of stores they aim to maintain and the size of the business they think this will be at the end of the day are unrealistic,” he said.

Potgieter said that if they manage their expectations, Pick n Pay is a fantastic brand and a very attractive business.

“If they right-size it and manage it conservatively, there is enormous turnaround potential,” he said.

“Furthermore, there is no gearing, so there is no implicit risk that it will go under tomorrow.”