Pick n Pay is making a big change to survive

Retail group Pick n Pay is leaning harder on its currently more successful Boxer brand, with progress being made to spin the business off with its own public listing and converting some Pick n Pay-branded stores to Boxer stores.

According to Pick n Pay group chairman, Gareth Ackerman—who will be retiring from the role in 2025—the success of the Boxer brand within the Pick n Pay stable proves that the group’s financial and operation struggles over the past few years were more than external factors hitting the business.

For the year ended 25 February 2024 (FY24), the group delivered a R3 billion loss, impacted by increased interest charges due to increased gearing and a R2.8 billion non-cash store asset impairment in the group’s Pick n Pay grocery business.

Sales in the group grew 5.4% (2.9% on a like-for-like basis) to over R108 billion in South Africa, but this was largely driven by Boxer stores, which saw sales boosted by 17.3%, versus just 0.3% at Pick n Pay stores. Boxer stores now account for 34% of sales participation.

While Pick n Pay stores posted a R1.5 billion trading loss (from R1.3 billion profit before), Boxer saw its trading profit increase to R1.9 billion (from R1.8 billion before).

Pick n Pay’s ‘new’ strategy (dubbed Ekuseni) in 2022 has been halted in its tracks – while Boxer’s expansion continues. The Boxer segment saw customer growth of 14% and basket growth of 2.9%, and 50 new stores were opened.

To leverage this remarkable performance in what has otherwise been a dismal set of results, Ackerman said that Pick n Pay will use Boxer as a core pillar of its recapitalisation plan, with the group aiming to raise R12 billion.

“Given the position in which we found ourselves, the board has elected to do a R4 billion rights issue which is supported by the Ackerman family,” he said.

“This will be followed by an IPO of our Boxer business, hopefully by the end of 2024.”

According to the group, it hopes to raise between R10 billion and R12 billion through a R4 billion rights offer later this year, as well as R6 billion and R8 billion from the Boxer IPO.

Within the 2025 financial year, the group will also move to convert some of its existing Pick n Pay stores into Boxer stores, ‘where customer demand and demographics call for it’.

“Multi-year loss-making stores that are unsuitable for conversion to franchise or Boxer will be closed,” said the group.

Read: Massive loss for Pick n Pay