Pick n Pay closing stores across South Africa

Pick n Pay released a trading statement which revealed poor sales amidst the closing of numerous stores over the last five months.

The statement, released on Tuesday, provided financial and operational data for the 21 weeks ended 21 July 2024.

The year’s first five months were brutal on Pick n Pay stores. Pick n Pay sales only grew 0.1% over the period.

Like-for-like sales were slightly higher at 1.1%, while Pick n Pay South Africa sales increased 0.6% and 1.7% like-for-like.

Pick n Pay explained that its total sales lagged like-for-like sales because it closed numerous stores during the period.

In the first 21 weeks of the financial year, Pick n Pay closed 16 supermarkets, including four corporate stores and 12 franchise stores.

Pick n Pay said company-owned supermarkets in South Africa, which account for most reported sales, have significantly underperformed in recent years.

This part of the business is a key focus area of the new Pick n Pay management team’s turnaround plan.

“Due to improved retail disciplines, like-for-like sales for this segment increased from -0.5% in H2 FY24 to 3.6% for the period,” Pick n Pay said.

It also highlighted that Pick n Pay Hypermarkets returned to positive sales growth after a sustained period of underperformance.

“Against this, like-for-like sales momentum in our South African franchise supermarkets was a disappointing -0.8% across the period,” it said.

Company-owned supermarkets have rarely outperformed franchise supermarkets over recent years.

Pick n Pay said this trend reversal further confirmed early progress in the turnaround of company-owned supermarkets.

However, revitalising the performance of the franchise stores remains a key priority for the retailer.

Segment	Sales growth	Like-for-like sales groth
Pick n Pay sales (SA and Africa)	0.1%	1.1%
Pick n Pay SA sales	0.6%	1.7%

Pick n Pay trading statement for the first half of the year

Pick n Pay released a trading statement for the 26 weeks that ended 25 August 2024 – the first half of its 2025 financial year.

It informed shareholders that it expects earnings per share (EPS), headline earnings per share (HEPS), and comparable HEPS for H1 FY25 to decrease by more than 20%.

Pick n Pay said the outcome is broadly in line with the expectation of CEO Sean Summers at the presentation of the full-year results in May 2024.

Summers told investors that the company’s situation may worsen before it improves, and the trading statement revealed this.

The Group expects the Boxer segment’s trading profit to show positive year-on-year growth, which aligns with expectations.

However, the Pick n Pay segment’s trading profit is expected to decline year-on-year, dragging down the group’s trading profit.

Pick n Pay could not provide details of the anticipated range for EPS and HEPS for the first six months of the financial year.

This is because the retail group’s management does not yet have the required degree of certainty to provide details about the expected results.

“A further update to this trading statement will be provided once the group has the required degree of certainty to do so,” Pick n Pay said.

Despite the guided year-on-year earnings decline, the retailer expects full-year profit/loss before tax and capital items to significantly improve.

Pick n Pay added that the successful conclusion of the R4 billion rights offer in early August strengthened its balance sheet.

“Expenditure remains within expectations, and inventory levels remain well managed within the Pick n Pay and Boxer segments,” it said.

“The focus is now on the second step of the recapitalisation programme, with the planned IPO of the Boxer business on track.”