Pick n Pay ready for war

Pick n Pay has successfully completed its two-step recapitalisation plan, wiping out its debt and giving it additional capital to compete against Checkers and SPAR.

In February, Pick n Pay unveiled its recapitalisation plan as part of its strategy to restore the performance of Pick n Pay supermarkets. It received strong shareholder support.

• The first step was the Pick n Pay rights offer. It was more than double oversubscribed and raised R4.0 billion in August 2024.

• The second step was the Boxer IPO, in which shares worth R8.5 billion were placed at R54, which attracted significant investor interest.

The capital raised enabled Pick n Pay to repay its long-term debt and convert interest costs to interest earnings.

Pick n Pay now holds cash reserves critical for its turnaround, which will be used for investment into new stores and store refurbishments.

The money will also be used for product range development, technology and innovation, and staff training.

Importantly, strong shareholder support enabled Pick n Pay to retain over 60% of Boxer, the group’s precious growth asset.

“Successfully concluding our recapitalisation plan in such a short space of time is an extraordinary milestone for Pick n Pay,” Pick n Pay CEO Sean Summers said.

“The outcome reflects the individual strength of the Pick n Pay and Boxer brands and the shared belief of our shareholders in our ability to deliver on our strategic goals.”

Summers said the successful execution of the recapitalisation plan provides a solid foundation for the ongoing turnaround of Pick n Pay.

Under the leadership of a refreshed management team, Pick n Pay has made early progress in turning the company around.

It includes enhancing its product range, improving its product availability and customer service, and advancing its store reset programme.

These aspects have delivered early improvements in the underlying performance of the core Pick n Pay business.

“This is a pivotal step forward in Pick n Pay’s journey to deliver shareholder value and to create a stronger and more competitive future for the group,” the company said.

Boxer listing

On Thursday, Boxer was listed on the Johannesburg Stock Exchange (JSE), marking a significant milestone in its 47-year journey and positioning it for future growth.

This is the first listing of a soft discount retailer in South Africa and one of the most anticipated listings in many years.

The listing enables Boxer to access local and international capital markets, supporting its ambitious plans to double its store footprint and grow its market share.

Boxer has approximately 68% of the discount grocery retail market by delivering low prices for customers.

It offers a diversified proposition, including fresh, bakery and butchery counters and in-store services, such as financial services.

Boxer’s high sales density, low-cost operating model, and relatively light asset base allow it to generate high returns on investment.

The retailer boasts a return on invested capital of 26.5% for the 52 weeks ended 25 February 2024.

“The value retail sector has the largest number of customers and is the fastest-growing segment, despite limited spending power,” Boxer CEO Marek Masojada said.

He said Boxer’s listing is an incredible milestone for their business, recognising the team’s hard work over the years.

Summers said they saw the potential in Boxer over 22 years ago when they first bought the company.