End of an era for Pick n Pay

Pick n Pay’s ownership structure has officially changed, with the Ackerman Family giving up control of the retailer after 57 years at the helm.

The retailer has been hit by extreme headwinds recently, with the company reporting R3.2 billion loss for the financial year ended 29 February 2024 (FY24)

Despite profits at Boxer and Pick n Pay Clothing, the group’s core grocery business triggered a R2.8 billion non-cash impairment on the assets of Pick n Pay company-owned stores.

In response, the group announced a two-step capital raise plan, starting off with a R4 billion rights offer.

The offer was a success, with it being oversubscribed by 106% as total subscriptions reached R8 billion.

The R4 billion generated is being used to pay down debt, stabilise the balance sheet, and invest in Pick n Pay’s turnaround strategy.

As per the rights offer, the Ackerman family reduced their percentage of voting rights from 52% to 49%.

The group said that a 3.00% reduction in the Ackerman family’s voting rights has been undertaken to support its transformation.

Thus, the family no longer has complete control over the direction of the company.

Raymond Ackerman founded Pick n Pay, in its current form, in 1967 after he bought four stores with his wife, Wendy.

Despite his 2010 resignation as chairman, Ackerman’s family maintained control over the group.

However, the poor results have ushered in a new era, with Gareth Ackerman (Raymond’s son) set to resign as chairman after the FY25 results are released.

Gareth would have been chairman for 14 years.

What next

The group said that the recapitalisation of its business forms one of six strategic priorities aimed at restoring profitability at the group’s core Pick n Pay grocery stores while also driving further growth at the Boxer and Pick n Pay clothing.

The group said that it is now seeing measurable improvements at its core Pick n Pay grocery business.

“The successful conclusion of the Rights Offer demonstrates the market’s strong confidence in our iconic brand and in our turnaround strategy,” said CEO Sean Summers.

“It marks a crucial first step in our recapitalisation plan, positioning the group well to fund long-term sustainable growth.”

“We can now intensify our focus on our core Pick n Pay retail business. This achievement underscores our commitment to executing our strategy. We appreciate this incredible support from our shareholders.”

With the rights offer finalised, the group has completed the first step to recapitalise its business.

The second step will be listing Boxer on the JSE later this year.

Boxer, alongside Pick n Pay Clothing, was a bright spark for the group amid a challenging operating environment.

In FY24, overall group turnover increased by 5.4%, driven by strong growth from Boxer (17.3%) and Pick n Pay Clothing standalone stores (17.0%).

Although overall trading profit declined by 87.4% to R385 million, Boxer posted a R1.9 billion trading profit (FY23: R1.8 billion profit).

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