Retail

Pick n Pay closing company-owned and franchise stores across South Africa

Over the past six months, Pick n Pay has closed over 54 franchise and company-owned stores and only opened 36.

This was revealed in the retailer’s results for the 26 weeks ended 25 August 2024, which showed a slightly improved performance for Pick n Pay.

In its last full-year results, Pick n Pay became technically insolvent, meaning its liabilities outweighed its assets, and the company had negative equity.

However, this situation turned around in the interim results, as Pick n Pay reported positive equity of R2.88 billion. The retailer managed to decrease its liabilities significantly over the six-month period.

In addition, the company’s revenue increased to R57.76 billion from R55.42 billion the year prior.

While this allowed its trading profit to increase by over 150% compared to August 2023, its loss for the period deepened significantly.

Pick n Pay’s total comprehensive loss for the interim period was R846.7 million, a 40% increase from the previous year.

Its basic loss per share also deepened by around 40% to 140.83 cents per share.

However, one standout from these results is Boxer’s performance. In the six months, Boxer achieved strong sales (12.0%) and trading profit (16.0%) growth, with positive volumes and sustained market share growth.

“Boxer’s outstanding performance continues to be underpinned by its great value branded and confined label grocery range, its firm focus on basic commodities, and its quality butchery, bakery and fresh produce offer,” the retailer said.

Boxer was also one of the biggest contributors to new store openings in the past six months.

In the interim period, Pick n Pay opened 29 company stores and closed 21. Boxer constituted 17 of these new store openings and only 1 closure.

Pick n Pay also opened 7 new franchise stores in the period but closed 33. This brought the total amount of franchise stores to 696.

Pick n Pay explained that Boxer’s store opening programme contributed 4.3% to total sales growth, with 12 net new stores, including one Pick n Pay conversion, added over the period.

It said the pace of new stores will accelerate in the second half of the year, with 53 more stores planned across all formats – bringing the total net new stores planned for FY25 to 65. 

The store roll-out is expected to support sales momentum in the second half of its 2025 financial year and into 2026. 

Boxer’s strong performance comes ahead of its listing on the JSE. Part of Pick n Pay’s turnaround plan is to spin off Boxer and list it separately on the JSE.

In its interim results, Pick n Pay provided an update on this process, saying the final quantum, terms, and timing of the Boxer IPO are being finalised.

However, the retailer warned that the key risk relating to the Boxer IPO is that unexpected and unfavourable macroeconomic conditions may prevail at the desired time of the Boxer IPO, thereby potentially delaying the process. 

“A delay in the Boxer IPO does not trigger a default in the Restructuring Support Agreement entered into with the group’s lenders,” the retailer said. 

“The group and lenders recognise that, depending on the extent of the delay, covenants for February 2025 may need to be revised, and the process of doing so is provided for in the Restructuring Support Agreement.” 

The retailer said a Boxer valuation covenant may come into effect. However, the board and management are confident that there is adequate headroom, and management’s forecasts do not suggest that this headroom would reduce in the period to October 2025 and beyond.

“The Board and management are confident that this risk relating to the Boxer IPO has been appropriately managed,” it said.

The company added that it does not expect to declare any dividends until its two-step Recapitalisation Plan has delivered a sustainable capital structure and the group has returned to sustainable profitability.

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