Pick n Pay regains its footing, but still has a mountain to climb

In South Africa, company fortunes are often judged by braai talk. In these circles, Pick n Pay’s name has been drawing worry and disbelief. Its CEO, Sean Summers, says those are the kind of urban legends that become self-fulfilling if you don’t change the story.

“It takes time to turn that narrative around,” he said. The company’s sponsorship of the Springboks, he added, was a visible reminder that “Pick n Pay is committed to South Africa, that we’re going to be here for the long haul.”

Read more: Pick n Pay pushes for a financial comeback by backing the Boks and partnering with FNB 

The retailer’s latest interim results suggest the company is regaining its footing after years of decline.

“Are we where we want to be? Hell no. But are we on the way on this journey? Absolutely,” said Summers. “If you think of Table Mountain … we are solidly at the cable station at the bottom. We’ve bought our ticket and the cable car is on the way. We know where we’re going, but we’ve got a journey to get there.”

For the 26 weeks to 31 August 2025, the group slashed its headline loss by 45.3% to R439-million, down from a loss of R803-million in the previous corresponding period.

Boxer: the base camp  

Boxer continues to be Pick n Pay’s surest footing. The value retailer’s turnover surged by 13.9% year-on-year to R22.5-billion, while trading profit jumped by 16.2%. Along with its 4.1% trading margin, it underlines the fact that South Africa’s cash-strapped consumers are voting with their shopping baskets.

“Boxer truly is an absolute, absolute gem. I mean, they’re just in the right spot, and their virtuous circle is incredible,” said Summers.

Read more:  Boxer punches past inflation with volume gains and first dividend

CFO Lerena Olivier praised Boxer’s consistent execution. “They maintained a trading margin at 4.1%, aligned with the business philosophy to reinvest any gains in their customer offer,” she said.

Boxer’s performance has provided stability as Pick n Pay works through its restructuring. The group holds a 65.6% stake in Boxer, with Olivier confirming that there are no plans for an unbundling.

The group plans to invest roughly R1.1-billion in Boxer over the next year as part of a broader R2.2-billion capital programme. Summers said the bulk of this spending supported Boxer’s continued expansion and infrastructure build, which he described as “one of our most important growth vectors”.

Learning to walk uphill  

The flagship Pick n Pay supermarkets remain a work in progress. This segment posted a trading loss of R621-million, an improvement of 13.5%, but still far from the summit.

Like-for-like sales in company-owned stores grew by 4.8%, marking a third straight period of improvement, while customer growth climbed by 7.4%.

Summers said these trends showed that the brand still connected with its shoppers.

“It’s very, very clear that the South African consumer still loves Pick n Pay and still wants Pick n Pay,” he said. “When we put ourselves in a position to deliver what they want, they respond positively.”

Read more: After the Bell: Pick n Pay and the great recovery

To close the gap, Summers said Pick n Pay needed group sales to grow by “another three or four percent ahead of expenses” and improve margins. He said store closures were largely done, and the company would begin to show cleaner year-on-year comparisons.

Olivier said the company was intentionally directing savings from store closures into the right skills to drive top-line growth.

“We are focused on building a sustainable business. We will not chase quick wins just to make the result stronger,” she said.

Back to the basics 

Summers repeatedly said the retailer’s turnaround depended on trading well, buying smart and focusing on customers. The group’s gross margin widened this period despite giving more to franchisees, which Summers said showed that the model was working.

However, analyst Chris Gilmour warned that the company still trailed its biggest rival. He said Shoprite “has got the data and it’s using it to its advantage,” while Pick n Pay “still is in the stage where it’s actually having to create that knowledge base”. He added that PnP’s turnaround goal was no longer a “nice to have”, but an essential requirement.

Summers acknowledged the technology challenge but rejected the idea that Pick n Pay was lagging.

“Some people talk about the wonderful world of technology, and they’ve got special departments doing this and that. I think it’s more talk than do,” he told Daily Maverick.

“We’re very aware of the opportunities that enhanced machine learning has. We don’t see ourselves as being behind the curve or massively disadvantaged.”

Pruning to grow 

After 18 months of cutting back, the company’s store estate reset is nearly done. A total of 54 underperforming stores have been closed or converted, with 65 expected to be gone by year-end.

“This is an important milestone,” said Summers. “Going forward, any further challenges will simply be a normal part of assessing each store’s performance.”

The process has avoided close to R100-million in losses, according to Olivier, with much of that reinvested in “building the muscle we need to create retail excellence”.

Read more: Small suppliers’ dreams take flight with Pick n Pay, but the risks might clip their wings

The company will match its Boxer investment with another R1.1-billion for the Pick n Pay segment, focused on revamps, customer-facing upgrades and long-overdue maintenance.

“It’s not just about spending money on stores,” said Summers. “If you don’t have the right people in the store and the product’s not there, you’re still not going to do the business.”

Digital, clothing and deliveries gain altitude 

While supermarkets trudge upward, other divisions are sprinting ahead. Pick n Pay Clothing grew turnover by 12%, surpassing 400 stores, while online sales jumped by 34.4%.

On-demand delivery through asap! and Mr D Groceries rose by 44%, and a new asap! app launched in April sparked a 131% surge in first-time buyers.

“Our primary focus as a retailer remains on having great stores with great products, great people and great shopping experiences,” said Summers.

A partnership with global logistics giant DP World, set to take effect in 2027, is expected to overhaul the group’s distribution network and further strengthen efficiency.

A debt-free view 

Pick n Pay’s real stabiliser came from its November 2024 recapitalisation. The resulting debt paydown cut finance costs nearly in half and delivered a R537-million swing in net funding interest.

Olivier called it “a solid result for this half”, saying the recapitalisation allowed them to focus on operational execution. Trading profits rose by more than 270% to R310-million, and gross margin improved to 18.2% from 0.3%.

Rand Swiss senior analyst Shaun Murison told Reuters that Pick n Pay’s guidance that its full-year trading loss would remain roughly in line with last year was honest but sobering.

Murison added that while the 40% improvement in after-tax losses to R496-million looked encouraging, much of it appeared to come from lower financing costs rather than a full turnaround in trading performance.

Read more: Rebooting Pick n Pay — Data, loyalty and the road to digital redemption

The company remains in the red, but the bleeding has slowed, and for the first time in years, it might breathe comfortably. The board has suspended dividends until profitability returns, which Olivier expects to be around 2028.

The group’s share price has reflected cautious optimism. At closing on 27 October, Pick n Pay traded at R30.43, down by 6.28% but above its 52-week low of R23.12.

“Pick n Pay is here. Pick n Pay is going nowhere,” said Summers. “We say, ‘South Africa, we’ve got your back’ — hopefully South Africa’s got ours.”

He sees the retailer’s revival as part of a wider national spirit, mirrored in its sponsorship of the Springboks and its renewed connection with communities.

Summers’ turnaround may not yet be a summit photo moment. But after years of scrambling on loose gravel, Pick n Pay has found its footing and perhaps, finally, a view worth climbing for. DM