Pick n Pay’s value stores, Boxer, traded strongly in 21 weeks to July 21, but the company-owned anchor grocery chain reported weak sales and store closures as a new management team began to execute a turnaround plan.
PIck n Pay sales grew 0.1% (- 1.1% like-for-like), with Pick n Pay segment sales increasing only 0.6% (1.7% Like-for-like). Sixteen supermarkets – four corporate stores and 12 franchise stores – were closed. Group sales increased 4.5% for the period (3.7% like-for-like), a trading update said today.
Boxer sales grew a more robust 13.5% (9.2% like-for-like).
This was driven by strong like-for-like performance and new store openings. Clothing sales in standalone stores was up 10.3%, but grew by only 0.7% on a like-for-like basis due to the late arrival of winter weather as well as port delays.
Online sales grew by 63.9%, sustaining the 74.4% online sales growth momentum reported for 2024.
Pick n Pay is in the midst of a recapitalisation and turnaround mainly because its company-owned supermarkets in South Africa, which account for most reported sales, underperformed over the past few years.
These are the focus of the turnaround plan, which entails also the listing of Boxer, with the proceeds to be used to reduce group debt, and the revitalisation of the franchise stores.
The group said improved retail disciplines resulted in like-for-like sales for the Pick n Pay segment increase from -0.5% in the second half of the 2024 year, to 3.6% for the period. Pick n Pay Hypermarkets also saw positive sales growth after a long period of underperformance.
The group said a key turnaround indicator was in the Pick n Pay SA segment, where PnP SA Supermarkets sales growth increased from -0.4% in the second half of 2024 to 2% in the 21 week period.
“Against this, like-for-like sales momentum in our South African franchise supermarkets was a disappointing -0.8% across the period,” it said.
The group’s supermarkets have rarely outperformed franchise supermarkets in recent years. Pick n Pay said the trend reversal indicated early progress in the turnaround strategy.
The group forecast first-half earnings per share and headline earnings per share to decline by more than 20%, an outcome broadly in line with the forecast by CEO Sean Summers at the last year-end, where he had noted that “the situation will get worse” before it improved.
Boxer’s first-half trading profit was forecast to show positive growth, while the Pick n Pay segment trading profit was expected to decline.
The group said trading expenses were under control because a R259 million employee restructuring cost last year did not recur, and diesel costs were much lower due to the cessation of load shedding.