Pick n Pay can be a winner

Shane Watkins, chief investment officer at All Weather Capital, said Pick n Pay can be a good investment opportunity after the recent pullback.

On Monday, 27 October 2025, Pick n Pay released its interim results for the 26 weeks ended 31 August 2025.

On a group level, the company saw its turnover grow by 4.9% to R58.8 billion and its trading profit improve by 273.5% to R310 million.

However, this was primarily driven by Boxer’s standout performance. It grew turnover by nearly 14% to R22.52 billion and its trading profit by over 16% to R931 million.

In contrast, the company’s core brand, Pick n Pay, weighed on its latest interim results. Its turnover remained flat at R36.3 billion, and it recorded a trading loss of R621 million.

Pick n Pay stores’ revenue remained virtually unchanged. Its revenue increased by only 0.06% from the previous interim period, growing from R36.29 billion to R36.30 billion.

This means Pick n Pay stores are not increasing their market share and seeing no real growth in revenue.

Pick n Pay South Africa, for instance, has seen its revenue on a downward trend, reporting a 0.4% decrease in revenue compared to the previous period.

However, it is not all bad. This loss is a 13.5% improvement from the first half of the company’s 2025 financial year.

The retailer attributed its loss to a reduction in store estate, which declined by 59 supermarkets over the 26-week period.

Investors were not impressed by the retailer’s results, and Pick n Pay’s share price plummeted after the results were released.

Jonathan Fisher from PSG Wealth Sandton explained that while Pick n Pay reduced its losses, it was not to the extent which investors expected.

Another challenge is that the sales growth of the company-owned stores is lower than the like-for-like operating cost growth.

Fisher predicted that it would take a fair amount of time for Pick n Pay to return to profitability, which may concern many investors.

Grant Nader from Benguela Global Fund Managers agreed with Fisher, saying there are no clear signs that Pick n Pay’s turnaround strategy is working yet.

Shane Watkins says Pick n Pay is a good investment

Watkins is bullish on Pick n Pay. He told Business Day TV that the market punished the share price despite the company’s many positive signs.

“Pick n Pay achieved a better gross margin and there is better visibility on its longer-term targets,” he said.

He added that Pick n Pay’s shareholding in Boxer is worth more than its market cap. Simply put, investors can get the Pick n Pay business for free.

Boxer, which is now a separately listed entity 65.6% owned by Pick n Pay, is the shining light in the group’s portfolio.

Pick n Pay’s 65.6% shareholding in Boxer has a market value of R23.4 billion, while the Pick n Pay Group’s market cap is only R22.2 billion.

This means that shareholders discounted Pick n Pay stores and all the related assets to less than zero.

“You are getting R4 billion in cash, 800 stores, Pick n Pay Liquor and Pick n Pay Clothing for free,” Watkins said.

“The market and the share price are telling us that all of Pick n Pay’s other assets are worth nothing.”

Watkins said that by investing in Pick n Pay, people will get free optionality that chief executive Sean Summers will fix the business, which is likely to happen.