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Pick n Pay has moved into the red for the 2024 financial year driven by a substantial trading loss in its Pick n Pay business, which more than offset a strong performance from the group’s Boxer business.

The group reported a loss after tax of R3.19bn for the 52 weeks to February 25 compared with a profit of R1.17bn a year ago

A higher interest charge resulting from increased gearing and a R2.8bn non-cash store asset impairment in the group’s Pick n Pay business also affected earnings, the company said in a statement on Monday.

Turnover was up 5.4% at R112.3bn, thanks to strong growth by Boxer (17.3%) and Pick n Pay Clothing stand-alone stores (17%).

It reported a headline loss per share of 203.06c from headline earnings per share (HEPS) of 259.25c a year earlier. The board has not declared a dividend. 

Trading profit declined 87.4% to R385m, reflecting a R1.5bn trading loss for Pick n Pay and a R1.9bn trading profit for Boxer.
The Pick n Pay trading loss was primarily driven by flat (0.3%) Pick n Pay sales, trading expense growth exceeding sales growth, and gross profit margin contraction in that business, it said.

A 198.8% increase in net interest paid to R701.8m due to higher gearing and increased interest rates also weighed on the results.

The trading loss reported by the Pick n Pay business triggered a R2.8bn non-cash impairment on the assets of Pick n Pay company-owned stores.

The disappointing Pick n Pay operational performance resulted in group net debt increasing to R6.1bn from R3.7bn a year ago, which contributed to the group’s February announcement of a two-step equity capital raise plan to recapitalise the group, unlock the underlying value of the group’s Boxer business and allow management to focus on improved operational execution within the Pick n Pay business, it said.

The group said that the 2024 financial year was “a particularly difficult period for the group”.

While its Boxer, Pick n Pay Clothing and online businesses  delivered strong results, Pick n Pay supermarkets struggled to gain sales traction while contending with gross profit margin pressure and load-shedding costs, consequently reporting a substantial trading loss alongside a material asset impairment, it said.

Despite these challenges, the group is cautiously optimistic. It had new experienced leadership at CEO, group executive, regional and commercial management levels that had re-energised the Pick n Pay supermarkets business, it said.

The implementation of CEO Sean Summers’ strategic plan is under way, with encouraging early results and the two-step recapitalisation plan is making good progress, with the rights offer to be imminently launched.

Successful implementation of the two-step plan will see a sharp reduction of interest costs and generate resources to drive the Pick n Pay turnaround.

The Boxer initial public offering (IPO) is set to unlock the value of the Boxer asset for Pick n Pay and its shareholders and will allow Boxer to achieve its long-term growth potential.

“The strategic plan is operationally focused on the turnaround of Pick n Pay supermarkets and hypermarkets, with particular focus on eliminating losses incurred by specific loss-making company-owned stores and improving the performance of the remainder of the estate.”

More than 100 loss-making supermarkets will either be closed or converted to Pick n Pay franchise or Boxer stores. Improving the performance of the remainder of the estate will be achieved via initiatives to drive like-for-like sales growth and optimise the operating model.

Summers indicated on his return that restoring the Pick n Pay business to meaningful profitability would be a multiyear process.

“Given the extent of the [2024 financial year] loss reported by Pick n Pay, management has no illusions about the magnitude of this task. However, given that Pick n Pay has previously consistently traded at a profit, and the turnaround initiatives already in flight, the group is confident this can be achieved over the medium term,” it said.

The group expects to improve its financial performance over the next two years. The improvement is expected to be derived from the execution of the strategic plan in Pick n Pay Supermarket, the continued strong profit growth from Boxer and Pick n Pay Clothing and significantly reduced interest charges from the debt reduction after the planned recapitalisation.

Group total sales growth for the first 12 weeks of the 2025 financial year was 4.2%, slightly below 2024’s 5.4%, but like-for-like sales growth, also at 4.2%, was ahead of 2024’s 2.9%.

Boxer’s total sales growth for this 12-week period was in line with the first half of 2024, while Pick n Pay’s total sales for the period declined slightly as a result of store closures.

Importantly, like-for-like sales growth for Pick n Pay was up on 2024, driven by sequential monthly improvements in company-owned stores, as execution of the strategy gained traction, it said.

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