Pick ‘n Pay, a leading South African grocery chain controlled by the affluent Ackerman family, reported a dismal first half, hampered by a 2.8-billion-rand ($153.7 million) impairment on failing stores. Persistent load shedding and increased competition put additional pressure on the Cape Town-based company.
The group’s pre-tax deficit was R837.2 million ($45.89 million), down from a profit the previous year. Net financing charges increased by 47.3 percent to R913.1 million ($50.06 million), with diesel expenses for generators reaching R396 million ($21.71 million) during power shortages. This hindered the company’s capacity to conduct promotional efforts.
Despite a hard economic situation, Pick ‘n Pay’s cheap chain, Boxer, performed admirably, with sales increasing by 16.1 percent. The chain increased its store count to 454 sites, adding 27 additional locations.
CEO Sean Summers acknowledged the difficult economic conditions hurting the group’s performance, such as load shedding, rising inflation, and low consumer spending.
He continued: “We have about R1.8 billion ($98.5 million) of the writedown for some selected loss-making stores which will be closed or converted to Pick ‘n Pay franchises or Boxer stores under the group’s strategic plan and an R1 billion ($54.72 million) impairment of assets for underperforming stores.”
Despite the challenges, Summers, a seasoned retail executive, has a clear mandate to reinvigorate the core business. Pick ‘n Pay remains committed to strategic initiatives aimed at cost savings and operational resiliency.
The Cape Town-based business has over 2,000 outlets in eight African nations. The Ackerman family, which includes founder Raymond Ackerman and chairman Gareth Ackerman, owns a combined 25.53 percent (124,677,238 shares).
Pick ‘n Pay’s first-half performance demonstrates the considerable operational and financial challenges the company faces. The company’s ability to execute its strategic approach will be key to managing the current economic situation and attaining long-term success.
