Another huge loss for Pick n Pay

Pick n Pay has announced a total attributable loss to shareholders of R736 million for the 2025 financial year, though this reflects a significant improvement from the R3.3 billion loss seen a year prior. 

The group said that FY25 has marked a turning point for the group, as the Pick n Pay segment executed the initial leg of its operational and financial recovery. 

This included a R4 billion rights offer and the R8.5 billion raised through the IPO of Boxer, whose market cap of R30 billion is larger than Pick n Pay’s R21 billion. 

Company-owned Pick n Pay supermarkets saw a like-for-like sales revival, with turnover up 3.3% following the previous year’s 1.2% decline. 

The Pick n Pay segment also reduced its trading loss to R549 million from R1.5 billion in FY24, and returned to a trading profit in H2 FY25. 

Overall, the group delivered a much-improved FY25 result, with its loss before tax and capital items of R237 million much narrower than the loss of R1.4 billion in FY24. 

The recovery was driven by a R1.0 billion year-on-year drop in the Pick n Pay segment trading loss.

This was supported by a 2.3% net interest paid reduction as the recapitalisation made its initial impact on debt service costs. 

Group turnover also increased by 5.6% to R118 billion, with 13.2% growth from Boxer and 1.9% growth from the Pick n Pay segment. 

The gross profit margin also expanded by 0.3% to 18.4%, with gross profit in rand terms increasing by 7.3% year-on-year. 

Other income grew by 11.6%, with trading expenses increasing by just 1.9%, due to a flat occupancy charge and a sharp drop in its credit loss allowance. 

Of the group’s trading profit of R1.8 billion, Boxer’s R2.3 billion trading profit was negatively impacted by Pick n Pay’s R549 million loss. 

Notably, the group’s net finance costs decreased by 2.1% as the benefit for lower bank interest expense was offset by increased IFRS 16 lease interest.

This was due to the Boxer store rollout and the distribution network expansion. 

This reduced the group’s loss before tax and capital items from R1.4 billion in FY24 to R237 million. 

Moreover, the group’s non-cash asset impairment charges also dropped significantly from R294 million in FY24 to R3.0 billion in FY25. 

Following the Boxer IPO, the group reported a non-controlling or minority interest for the first time, at R85 million. 

This increased the group’s attributable loss to shareholders from its loss for the period of R651 million to R736 million. This is, however, far better than the R3.3 billion in FY24.

Outlook 

After strengthening its balance sheet via its recapitalisation plan, the group is now focusing on Pick n Pay’s further operational recovery while Boxer executes its growth strategy. 

Like the Pick n Pay business, several crucial milestones were achieved in FY25, such as closing or converting 40 loss-making SA supermarkets. 

Despite the FY25 trading loss reduction, the Pick n Pay segment still produced a material loss, particularly when considering lease interest expense. 

“The path back to break-even, profitability and ultimately long-term sustainable success is clear; and will be executed on in a considered and methodical manner,” said the group.

“However, it will take longer than initially envisaged, as the chosen strategy is to build retail muscle memory for long-term success.” 

Thus, the group no longer expects the Pick n Pay segment to break even on a trading profit-after-lease-interest basis in FY27, pushing it back a year.  

Despite the group’s challenges, it anticipates further profit recovery within the Pick n Pay segment over the next two financial years. 

This will be driven by further operational progress and the substantial FY25 debt service charge becoming net interest income in FY26. 

In the 8 weeks following the end of the period, the Pick n Pay segment’s South African turnover grew 0.8%, with like-for-like sales up 3.8%.

Company-owned supermarket like-for-like sales grew to 4.0%, while franchise continued its like-for-like sales recovery to +2.1%.

Regarding the group’s management, CEO Sean Summer has extended his stay with the group until 2028. 

“The ultimate success of my tenure will be judged in 5- and 10-year’s time, as today’s efforts to rebuild retail capacity and excellence bear fruit,” said Summers.