Saving Pick n Pay

When Pick n Pay CEO Sean Summers retook the helm in 2023, he knew the retailer had only one source of capital left to fund its ambitious turnaround strategy – the company he bought over two decades ago, Boxer.

Pick n Pay has now tapped this source twice over the past three years, bringing its once 100% stake down to 53.1%.

With Pick n Pay unwilling to reduce its stake below 50%, the retailer must now ensure that the R4.7 billion it raised from the latest sale of Boxer shares will be enough to set the company up for a profitable, sustainable turnaround.

Pick n Pay’s latest results for the 2026 financial year, released on 25 May, showed that it has made some progress in implementing its turnaround strategy.

The group is now long-term-debt-free, and Boxer’s exceptional performance allowed the group to return to a profit before tax and capital items for the first time since 2023.

However, Pick n Pay’s core segment – at which the turnaround strategy is aimed – continued to show signs of strain. 

Its trading loss increased to R1 billion, while trading expenses as a percentage of turnover rose to 21.7%.

In addition, Pick n Pay postponed its breakeven deadline for this segment from the 2028 to the 2029 financial year.

This came to the frustration of many investors, with the retailer’s share price declining by around 5% on the day its results were released.

While Pick n Pay and Summers have repeatedly emphasised that the turnaround would be a multi-year process, the delay of the breakeven date still came as a disappointment for investors hoping to see faster progress.

Pick n Pay’s turnaround strategy hinges on six strategic pillars, three of which are already considered completed, with uneven progress across the remaining three, as seen in the graphic below.

Crown jewel and cash cow

In an interview with Daily Investor following the release of Pick n Pay’s 2026 results, Summers explained that, when he returned to the helm, there was only one source of capital that could save Pick n Pay – Boxer.

Shortly after Summers returned to the CEO role in October 2023, he announced that one of the first pillars of Pick n Pay’s turnaround would involve a two-step recapitalisation process.

The recapitalisation was aimed at reducing the group’s debt, which had ballooned in the years prior and led to Pick n Pay becoming technically insolvent, and funding other parts of its turnaround.

The two steps were a highly successful and oversubscribed Rights Offer, which raised R4 billion, and the unbundling and separate listing of its then-wholly-owned subsidiary, Boxer.

Boxer is a discount grocery retailer that Pick n Pay acquired during Summers’s first tenure as CEO in 2002.

In the years since, Boxer has become one of the fastest-growing businesses in South Africa’s retail landscape, and the crown jewel in Pick n Pay’s stable as its core supermarkets segment struggled.

“When I returned, there was only really one source of capital that could save Pick n Pay,” said Summers, referring to the group’s shareholding in Boxer.

Boxer’s spin-off and separate listing on the JSE raised R8.5 billion for Pick n Pay, and reduced the retailer’s stake to a still-substantial 65.5%.

“If Pick n Pay didn’t own Boxer, then we wouldn’t have had any other alternatives. So, we had to utilise Boxer in order to save the company,” Summers told Daily Investor.

Summers’s two-step recapitalisation was considered successful, as it allowed Pick n Pay to address its mounting debt and return to a net cash position, while maintaining a majority stake in Boxer’s booming business.

This put Pick n Pay in far healthier standing than it was before Summers returned to the top job, and gave investors confidence in the retailer’s ability to successfully execute a turnaround.

However, on 18 May, Pick n Pay announced that the last stages of its turnaround will require more funding – specifically, R4.7 billion, which would be raised by selling another chunk of its stake in Boxer.

This sale, concluded on 18 May, saw Pick n Pay’s shareholding in Boxer reduce from 65.5% post-IPO to 53.1%.

Below 50% is off the cards

In its announcement of the Boxer shares sale, Pick n Pay said the proceeds would be used to support the ongoing implementation of its turnaround plan and growth strategy, while ensuring maximum financial flexibility over the medium term.

“This will enable the group to continue executing on its strategic priorities, investing ahead of the plan, with a clear pathway to returning the core Pick n Pay Stores segment to cashflow break-even,” it said.

In the same announcement, Pick n Pay affirmed that Boxer remains a vital part of the group, saying it is committed to retaining a controlling stake and participating in the discount retailer’s impressive growth trajectory.

In his post-results interview with Daily Investor, Summers reiterated this commitment, saying that selling Pick n Pay’s Boxer stake below 50% was not on the cards.

He further explained that Pick n Pay’s decision to split its Boxer share sale into two separate transactions was a strategic choice on the retailer’s part.

“When we listed Boxer, we sold down the portion of Boxer that we deemed appropriate to see us through for the next period, understanding that there would be value accreted over time,” he explained. 

The Pick n Pay CEO’s assessment proved true, as Boxer’s share price has boomed since its November 2024 listing, up 21.58%.

Summers pointed out that had Pick n Pay sold its stake down to the current level when Boxer was listed, it would only have raised around R3 billion, rather than the R4.7 billion it made recently.

The CEO said part of the latest sale proceeds will be reinvested in the Pick n Pay business, including cleaning up its store network.

The rest of the proceeds will be used to cover the losses Pick n Pay expects to sustain between now and returning to a break-even situation.

With Pick n Pay’s Boxer shareholding now at 53.1%, and the retailer unwilling to give up a controlling stake, any further share sales appear unlikely.

Over the past three years, Pick n Pay’s “one source of capital” that started its turnaround has raised a total of R13.2 billion.

To put this figure into perspective, it is over 70 times the R185.8 million Pick n Pay paid for Boxer when it acquired the company in 2002, underscoring the immense value this business has created over the past two and a half decades.