Pick n Pay slowly turning things around but losses continue

Pick n Pay expects improvement in its financial metrics, but the group warns that its core Pick n Pay grocery business will likely continue posting losses in the future.

In its 2024 financial year, the group declared a R3.2 billion loss following a significant impairment of its core Pick n Pay grocery stores.

With the group technically insolvent and in breach of its debt covenants, the group moved to raise R4 billion via a rights offer and R8 billion from Boxer’s IPO in a two-step recapitalisation plan.

Although returning CEO Sean Summers warned that things would get worse before they get better, the group has shown signs of promise.

In a trading statement for 53 weeks ended 2 March 2025, Pick n Pay said that basic earnings per share are expected to increase by 70% to 90% from the previous year’s loss of 581.85 cents.

Headline earnings should increase by between 55% and 75% from the headline loss of 172.21 cents last year.

As indicated by the group’s interim results in October, Pick n Pay said that the losses at the HEPS level are due to improved trading profit at Pick n Pay.

It was also due to the reduction in second-half interest charges, which resulted from the successful execution of the group’s two-step recapitalisation plan and Boxer’s sustained trading profit.

On the Basic EPS level, the improvement was aided by a large decrease in impairments, which declined from R2.4 billion, net of tax impact, to less than R500 million in FY25.

Despite the earnings recovery, the group continues to incur a loss within the Pick n Pay segment on a trading profit after lease interest basis.

The group cautioned that the loss in the Pick n Pay segment will likely remain the case for some time.

Pick n Pay’s official financial results for the period will be released on Monday, 26 May.

Major management changes

The trading statement comes after the group announced several updates at the board and management level at Pick n Pay.

The first was the announcement that former RMB CEO James Formby will take over as chairman from the outgoing Gareth Ackerman, who is retiring.

Founded by his father Raymond, Ackerman took over as Chairman in 2010 following his father’s retirement.

As per the R4 billion rights offer, the Ackerman family reduced their share of voting rights from 52% to 49%. Although this is still a large proportion, it ended the family’s outright control of the group.

Suzanne Ackerman, Raymond’s daughter, has also been chosen as the Chair of the Social, Ethics and Transformation Committee (SETC).

Her move is part of the group’s efforts to strengthen the independence of Board committees. Haroon Bhorat, an independent non-executive director, will replace her.

The group also announced that CEO Sean Summers extended his contract and will stay in his current role until May 2028.

“This extension ensures continuity and stability in the leadership team during significant strategic transformation,” said Pick n Pay. 

“It also allows for a considered and deliberate succession process, including a comprehensive handover period in due course.” 

Summers replaced Raymond Ackerman as CEO in 1999. He had worked with the group since 1974. He left in 2007 but returned in 2023 to steady the ship.