Pick n Pay crawling, walking, running back to profit

Pick n Pay CEO Sean Summers said that while the retailer has made significant progress, a turnaround takes time, and the company must first crawl before it can walk, and then run again.

Over the past eighteen months, under Summers’ leadership, Pick n Pay has made significant strides in turning the business around.

This came after years of sluggish growth, dwindling profitability, and several strategic missteps that saw the company lose its competitive edge and market share.

This state of affairs was a far cry from the Pick n Pay of old, particularly under Summers, whose first tenure as CEO ran from 1999 to 2007.

Under Summers, Pick n Pay was the clear grocery market leader in South Africa. It even outperformed Shoprite, Africa’s largest retailer, which was under the leadership of retail legend Whitey Basson at the time.

However, after Summers’ departure, Pick n Pay began to fall behind and became less competitive, which opened the door for Shoprite to become the market leader.

Pick n Pay’s performance continued to deteriorate, reaching a low point in May 2024, when the retailer reported being technically insolvent for the first time in its listed history.

The retailer’s total liabilities exceeded its total assets by R183 million, resulting in a negative equity position.

To turn this situation around, the retailer approached Summers about returning to the CEO position and leading the group’s turnaround. Summers accepted and, in September 2023, took back the reins.

Upon his return, Summers was transparent about Pick n Pay’s dire situation but also committed to turning the retailer around and restoring it to its former glory.

“I think if we apply our minds correctly, we can come back and carve back its place in the marketplace,” he said at the time.

“It’s about putting that passion back into the business, and that passion has to be shared by everybody. Every associate in the business should feel that same love and sense of belonging.”

Shortly after his return, Summers unveiled a strategic turnaround plan to get Pick n Pay back on customers’ shopping agendas.

Crucially, this plan involved a two-step recapitalisation strategy to address Pick n Pay’s debt problem. First, the retailer introduced a rights offer, and second, it unbundled and listed its Boxer business separately.

With both steps now complete, this plan has been highly successful. Pick n Pay raised a total of R12.5 billion through its R4 billion rights offer and the Boxer listing, which raised R8.5 billion.

These funds adequately address Pick n Pay’s mounting debt and restored the retailer to a net cash position.

However, some financial and operational troubles at the retailer still lurk, with Summer’s turnaround plan set to tackle both.

Mixed bag

Pick n Pay’s recently released results for its 2025 financial year showed the significant strides the retailer has made towards turning the company around, and all the areas it still needs to work on.

Pick n Pay reported group turnover of R118.61 billion, up 5.62% from its 2024 financial year. Trading profit was R1.76 billion, a significant improvement from the R405 million recorded in 2024.

This improvement was primarily driven by Boxer, which contributed R2.31 billion, while the Pick n Pay segment reported a trading loss of R549 million.

The group recorded a R651 million loss for its 2025 financial year. Notably, this is an improvement from the R3.30 billion loss it reported in 2024.

In addition, when examining Pick n Pay’s combined company-owned and franchise stores, the retailer’s supermarket estate declined by 45 stores to 570 supermarkets by March 2025.

Therefore, while Pick n Pay is in a far better position than before Summers’ return, there are still significant issues to address.

“When I returned in October 2023, I stated that the recovery of Pick n Pay would be a multi-year process and that things would get worse before they got better,” Summers said. 

“It is our sense that we see this unfortunate chapter now bottoming out, and we have recalibrated our recovery programme to break even in FY28.”

“You cannot rely on quick wins in our situation, and it will continue to be a journey as we rebuild our Institutional Memory.”

Crawl, walk, run

In an interview with Daily Investor following the release of these results, Summers reiterated this “no quick wins” sentiment.

He explained that his focus does not lie with the speed of Pick n Pay’s turnaround, but rather the quality and sustainability of this transformation.

Summers’ goal is to make long-term, sustainable changes to the organisation’s behaviour. His personal “metric” for success at the company is ensuring that a strong, capable team is running it.

This, he said, is one of the reasons he recently decided to extend his contract with the retailer for another three years.

“That is simply the most important thing. At the end of the day, humans run companies,” he explained.

He explained that, with the two-pronged recapitalisation plan now complete, the retailer will keep systematically implementing the turnaround plan that is already in place.

“The plan we have is clear and carefully considered. The journey, for us, is clear,” he said.

“We need to keep underpromising and overdelivering. Everybody in the company understands what the plan is, and the one thing that we don’t do is get distracted by noise.”

He said it is important to understand that Pick n Pay needs to crawl, then walk, before it can run again.

When he first returned to the retailer, Pick n Pay was barely crawling, and Summers believes they have now restored the company to a position where it can walk.

“We will get back there, but you can’t just go straight from crawling to running,” he said.

“As we’re dealing with all of these other issues in the organisation over the period ahead, we are at the same time going to be developing our athletic running capability again.”

Analyst’s view

Sasfin senior equity analyst Alec Abraham told Daily Investor that Pick n Pay delivered a headline loss per share of 61 cents in its 2025 financial year, which is slightly better than his expected loss of 67 cents. 

“So, I believe the group is on track with my assessment of the recovery trajectory,” he said. 

“Merely by virtue of the fact that they closed or converted (to Boxer) loss-making stores and reduced debt (and interest expense), it’s no surprise that the loss would have reduced.” 

While Abraham believes Pick n Pay will be profitable again, he is not as convinced that the chain will regain the market share it has lost over the past few years.

He said this will certainly not happen at present, because there is still much to do in the retailer’s recovery journey. 

“While Pick n Pay was historically a pioneer in the supermarket space, with strong competitive advantages, its strategy was stagnant and did not dynamically adjust to the adjusting operating and competitive environment,” he said. 

Therefore, he believes the retailer has lost any competitive advantage it had in the past as its peers evolved. 

This will make it difficult for Pick n Pay to win back market share in South Africa’s concentrated and highly competitive food retailing market.