Pick n Pay stores disappearing across South Africa

Pick n Pay is reshaping its store footprint by closing underperforming locations and converting select Pick n Pay stores into Boxer or franchise stores as it looks for a way to turn the business around.

The group has embarked on a major turnaround of its operations at the start of its 2025 financial year, which has seen 53 company-owned and franchise stores close down in the six months since February 2024.

This has been offset by the opening of 39 new stores across the business, resulting in net closures of 17 group stores.

The group’s main Pick n Pay supermarket brand has been most affected by the closures, with the group shutting 24 stores across operations (company-owned and franchise).

The new stores being opened mainly belong to the Boxer and Pick n Pay Clothing brands, with the former expected to see 53 new openings this year.

A key priority for Pick n Pay has been what it terms the “Pick n Pay store reset,” a process already well underway that focuses on addressing loss-making stores.

As part of the strategy, Pick n Pay is converting loss-making company-owned stores to franchise stores and has also successfully converted one supermarket store to a Boxer store—something which is likely to continue as the group leverages the much more successful discount brand.

According to the company, low-performing outlets significantly impacted group earnings in the first half of the year.

In its latest results, the group said it had completed its first store conversion to Boxer, with more stores expected be converted in the future.

Pick n Pay CEO Sean Summers has previously said the group would close 35 underperforming stores and convert 70 outlets to the Boxer brand.

The group’s latest report of stores shows that 20 company-owned and 33 franchise Pick n Pay stores have been closed down (53 total).

One Boxer store closed, and two associate supermarkets have also been shut down, taking the total to 56.

The group said that due to the “dynamic nature” of the turnaround plan, the expected number of loss-making stores to be converted or closed will be evaluated regularly.

The decision to expand Boxer’s presence comes on the heels of its strong sales and trading performance.

Over the first half of the fiscal year, Boxer stores reported an impressive 12% growth in sales and a 16% rise in trading profit.

Pick n Pay noted that in addition to delivering solid sales figures, Boxer has consistently expanded its market share by catering to the demand for affordable essentials, quality groceries, fresh produce, and basic commodities.

The group added that Boxer has positioned itself as a high-performing brand in the competitive soft-discount market with its attractive value proposition.

The expansion plan includes opening 53 more Boxer stores in the second half of the fiscal year, which Pick n Pay expects will drive substantial revenue growth.

Boxer’s robust growth has translated into a significant contribution to the Group’s overall store openings.

In the six-month interim period, Pick n Pay added 29 new company stores, with 12 of these being Boxer outlets.

The company closed 21 stores over the same period, with Boxer accounting for only one of those closures.

Notably, Boxer’s expansion added 4.3% to total sales growth, reflecting its role as a key engine of growth within the Group.

While the number of total group stores reduced between February and August 2024, Pick n Pay’s leadership remains optimistic.

CEO Sean Summers expressed confidence in achieving financial stability in the second half of the fiscal year, driven by ongoing efforts to close loss-making stores, convert some outlets to franchises or Boxer stores, and make further improvements in its digital and clothing segments.

Summers noted that the store consolidation efforts have already yielded positive results, with some stores initially slated for closure becoming profitable through improved management and efficiency measures.

He also hinted at new store openings within the supermarket category before the end of 2024, indicating the company’s commitment to strategically enhancing its store estate.

Despite its successes, Pick n Pay still faces challenges in its traditional retail segment.

The retailer’s trading profit increased to R82.5 million from R31.8 million in the prior year, underscoring the impact of strategic efforts to stabilize core operations.

However, gross profit margins declined by 0.6% to 17.9%, influenced by aggressive competitive pricing strategies and higher operational expenses.

Boxer, in contrast, generated a healthy trading profit of R801.4 million, while the Pick n Pay segment recorded a trading loss, up 9.1% to R718.9 million.

This loss is attributed to reduced gross profit margins and rising costs, which have put pressure on the brand’s profitability.

Nevertheless, Group turnover increased by 3.7% to R56.1 billion, with Boxer’s contribution showing a notable 12.0% turnover growth.

However, Pick n Pay’s own turnover dipped slightly by 0.3%, highlighting the ongoing challenges faced by its traditional store format.

Looking forward, Pick n Pay’s management remains confident that improved earnings are on the horizon.

The second half of the fiscal year is expected to benefit from reduced net funding costs resulting from the Recapitalisation Plan, ongoing growth in the Boxer and Clothing segments, and further recovery in Pick n Pay’s core retail operations.

The planned IPO of Boxer at the end of 2024, with Pick n Pay retaining a controlling interest, is anticipated to reinforce the Group’s balance sheet and support future expansion initiatives.

This shift towards a more profitable and sustainable retail footprint represents a significant milestone in Pick n Pay’s multi-year turnaround plan, with early signs pointing toward a path of steady improvement.

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