Top South African investor positive about Pick n Pay for the first time in a decade

Protea Capital Management CEO JP Verster said that, for the first time in a decade, he is positive about Pick n Pay’s prospects, as reality has finally dawned on the retailer.

Pick n Pay is one of South Africa’s biggest retailers, finding itself among other grocery retail giants like Shoprite, SPAR, and Woolworths.

Pick n Pay is also one of South Africa’s oldest retailers, founded in 1967 by legendary businessman Raymond Ackerman, who acquired the first four Pick n Pay stores in Cape Town.

Today, the group has more than 2,200 stores across South Africa, Botswana, Eswatini, Lesotho, Zambia, and Zimbabwe.

It trades under two primary banners, Pick n Pay and Boxer. Boxer is listed separately, though Pick n Pay still owns a 53.1% stake.

Under the Pick n Pay banner, the retailer also has a Clothing segment and its on-demand delivery platform, asap!.

Historically, Pick n Pay was one of the strongest players in South Africa’s retail landscape. However, it came under pressure over the past decade, largely due to self-inflicted strategic missteps.

As Pick n Pay struggled, it was overtaken by competitor Shoprite, which owns Checkers and Sixty60, and is now the clear market leader.

In 2023, Pick n Pay decided it was time for a change, and it brought in stalwart Sean Summers, who led the retailer from 1999 to 2007.

Under Summers’ first tenure, Pick n Pay was the clear grocery market leader. To help restore the company to its former glory, Pick n Pay asked Summers to return to the helm in 2023.

Since then, Summers and his team have been hard at work implementing a turnaround strategy that, so far, has yielded some results, including restoring the company to a net cash position.

On Monday, 25 May, Pick n Pay released its results for the 2026 financial year, which revealed that it had made some progress in improving its core Pick n Pay Stores segment.

The company reported a profit before tax and capital items for the first time since 2023, aided by Boxer’s standout performance.

The group’s headline loss per share reduced by 14.6% to 52.58 cents, while its overall headline loss improved by 5.4% to R386 million.

While Boxer reported a trading profit of R2.6 billion, the Pick n Pay segment’s trading loss widened to R953 million.

In addition, the group pushed out its break-even target date for the Pick n Pay segment from the 2028 financial year to 2029.

Reality has dawned

Speaking to BusinessDayTV, Verster noted that Pick n Pay’s results came off a negative base, and that Pick n Pay’s “huge loss” was offset by relatively large profits from Boxer.

“For me, I have been negative on Pick n Pay for more than a decade. They are now seeing the wood for the trees – reality has dawned,” he said.

Verster explained that Pick n Pay is no longer looking at its current situation through rose-tinted glasses, which is a positive development.

In Pick n Pay’s 2026 results presentation, Summers acknowledged that the company had been “destroyed from the inside” prior to its turnaround, and said much work still needs to be done to repair it.

“Sometimes, for a stock to perform well and a company to turn around, the very first step is to acknowledge reality,” Verster said. 

“It has taken a long time at Pick n Pay, but I think they are finally there. For the first time in 10 years, I am not so negative on Pick n Pay.”

In fact, Verster said he is rooting for the company’s turnaround and hopes the retailer can stem the “bleeding” from its core Pick n Pay segment.

To do so, he said the company will need to reduce the size of its hypermarkets, address labour issues, and reconsider its franchise model.

“Does it actually work? We have seen another company with a similar business model, SPAR, whose guild model is also under pressure,” he pointed out. 

“Today, in my mind, food retail is so competitive. It is really tough if you have two parties trying to share the margin: the wholesale division and the shop owner.” 

Ultimately, Verster said Pick n Pay has some very important strategic decisions to make, but he believes a turnaround is possible.

“I am less negative on them, and with R7 billion of cash on the balance sheet to finance these losses for the next three years, Pick n Pay has a fighting chance to get through this,” he said.