How much you would have if you invested R1,000 in Woolworths, Pick n Pay, Shoprite, and Spar at the start of 2024

Pick n Pay has been the best-performing major food retailer on the JSE, but there are some caveats to that figure.

Pick n Pay’s share price has risen 30% since the start of 2024, but this follows a massive drop after it posted a significant loss in its latest full financial year.

In the group’s financial results for the year ended 25 February 2024, the Pick n Pay segment triggered an R2.8 billion non-cash impairment on the assets of Pick n Pay company-owned stores, which resulted in an overall after-tax loss of R3.2 billion.

The current financial year did not start much better, with the group expecting earnings per share and headline earnings per share to decrease by over 20% in the 26 weeks ended 25 August 2024.

This outcome was in line with expectations, with CEO Sean Summers warning that the situation may have to get worse before it gets better.

The group has successfully concluded an R4 billion rights offer, which it said would strengthen its balance sheet.

The group is now focusing on the second step of its recapitalisation programme, with a planned IPO of Boxer, which, alongside Pick n Pay clothing, has been one of its best-performing businesses.

That said, many analysts have warned to approach Pick n Pay cautiously as the company is closing stores and losing market share to its competitors.

Redefine Properties recently said that it is taking back 10,000 square meters from Pick n Pay.

The second best-performing share since the start of the year was Spar (up 16.83%) despite the group’s results for the six months ended 31 March 2024 coming in below expectations.

SPAR’s total turnover, including Southern Africa, Ireland, South West England and Switzerland, increased by 7.9% to R77.2 billion. That said, profits were flat, while headline earnings per share declined 7.6%.

“All regions have been dealing with inflationary cost pressures and prolonged higher interest rates placing pressure on consumers and business alike,” said Spar.

“This, coupled with the hangover of system issues in South Africa, has impacted the results for the first six months of the year.”

The group, however, is selling its Polish business for R185 million as per its turnaround plan, but it will need to spend R2.7 billion to recapitalise the business.

The group said that the deal removes the loss-making business from the balance sheet and allows it to focus resources on its core business in South Africa and focus on new growth opportunities.

The third-best performing share is South Africa’s largest retailer Shoprite, which saw a 12.0% incrase in group sales during the 52 weeks ended 30 June 2024.

Headline earnings per share increased by 7% over the period.

The group is also selling its furniture business, including the OK Furniture and House & Home brands and excluding Angola and Mozambique operations, to Pepkor Holdings Ltd (Pepkor).

With the group’s growing market dominance, its share price has risen by 10% over the last year, but this comes off a relatively high base compared to Pick n Pay and Spar.

The worst-performing share was Woolworths, which has seen an 8% drop since the start of the year.

In the group’s financial results for the 53 weeks ended 30 June 2024, the group said that the challenging economic environments in South Africa and Australia have severely impacted its results.

Despite group turnover increasing 6.5%, operating profit declined from R6.6 billion to R6.0 billion, and headline earnings per share dropped 30% from 514.7 cents per share to 364.2.

Woolworths said that it was optimistic about the Government of National Unity and the suspension of load shedding.

The group said that elevated interest rates are still hurting consumer demand, which is also the case in Australia, where the macro recovery is taking longer than expected.

“Notwithstanding these external factors, we remain confident in our ability to deliver against our strategies and are well placed to benefit from any cyclical consumer recovery,” said Woolworths.

“Furthermore, we have a robust balance sheet, are highly cash generative, and are leveraging our strengthened foundations to optimise our existing businesses and invest in new sources and avenues of growth.”

The year-to-date performance of South Africa’s four major JSE-listed food retailers can be found below:

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