South Africans warned to stay away from Pick n Pay shares

Prominent investment experts have warned South Africans to stay away from Pick n Pay, as it faces a tough road ahead with uncertainty about the outcome.

Pick n Pay has experienced a significant decline in performance and market share over the last decade, with competitors like Shoprite Checkers eating its lunch.

The retailer struggled so much that it became technically insolvent, forcing it to ask shareholders for money and sell part of Boxer to pay off debt.

This two-phase recapitalisation plan, which raised R12.5 billion for Pick n Pay, enabled the company to repay its long-term debt and convert interest costs into interest earnings.

Pick n Pay now holds cash reserves critical for its turnaround, which will be used to invest in new stores and store refurbishments.

Under new chief executive Sean Summers, Pick n Pay launched a turnaround strategy to revive the retailer and restore it to its former glory.

He is confident Pick n Pay can win back customers it has lost over the past few years to a surging Checkers and Woolworths Food.

In March 2025, Pick n Pay launched a new store that includes key features the retailer plans to use in its refreshed store format.

These features include an expanded fresh produce section, a broader product range, and a greater emphasis on convenience.

Several Pick n Pay stores have been transformed with improved layouts, a more tailored product selection, and intensive staff training.

The retailer reported that these stores have shown remarkable success, with some seeing sales growth of up to 100% and a positive trend in overall customer feedback.

Pick n Pay has also expanded its partnership with FNB eBucks, incorporating more than 20% of its total retail client base.

This is part of Pick n Pay’s plans to get customers back in its stores and increase engagement with its delivery service, which it sees as a strong driver of future growth.

As the partnership with FNB gets customers through the door, the onus is on Pick n Pay to make them repeat customers by enhancing the in-store experience.

“It is all about revitalising the stores. We still have such great real estate around the country, and they need to be revitalised and renewed,” Summers said.

Expert opinion on Pick n Pay as an investment

With Sean Summers at the helm and Pick n Pay investing in the revitalisation of its stores to win customers back, it raises the question of whether the company is a good investment.

Over the last year, Pick n Pay’s share price increased by 56%. However, in 2025, the share price declined by 8%, causing uncertainty about the company’s prospects.

Jean Pierre Verster, founder and CEO of Protea Capital Management, told Business Day TV that he would stay away from Pick n Pay.

“Strategically, they are in a difficult situation, and they must spend a lot of capex,” he said. He also raised questions about the sustainability of Pick n Pay’s Hypermarket model.

He said the growth area in groceries is delivery, where Checkers Sixty60 has a significant lead over its competitors like Pick n Pay.

He added that Boxer is the only part of Pick n Pay he is interested in investing in, and after Boxer’s JSE listing, he can buy it directly. “Therefore, I am not interested in buying Pick n Pay,” he said.

Grant Nader, a senior portfolio manager at Benguela Global Fund Managers, said he does not see evidence of a good strategy being executed at Pick n Pay.

He said there are signs that Pick n Pay’s current strategy is not working and that they are far behind their competitors.

“Their store refurbishment is an expensive exercise, and they have a long way to go before it is obvious that they are turning the ship around,” he said.

He said there was no urgency to own Pick n Pay shares until there was more evidence of a successful turnaround.

Verster said people should look for increased top-line growth and improved cash flow from Pick n Pay to see whether its turnaround strategy is working.