Pick n Pay, South Africa opens a new tab. On Monday, it reported a wider half-year loss, reflecting trading losses in its core supermarket business alongside higher borrowing costs. Still, it said its full-year performance would be stronger.
The country’s third-biggest grocery retailer reported a loss before tax and capital items of 1.1 billion rand ($62 million) in the 26 weeks to Aug. 25, compared to a loss of 837.2 million rand last year.
Overall group turnover grew by 3.7% to 56.1 billion rand, with like-for-like sales growth of 2.9%.
“It is a year ago that I said…to you that it will get worse before it gets better, and these results that we just posted are a manifestation of that,” CEO Sean Summers told investors.
“But I can share this with you, quietly and confidently, that the worst is behind us.”
The group expects full-year earnings in its financial year 2025 to be stronger, supported by sustained earnings growth in its discount grocery unit Boxer, a reduced trading loss in Pick n Pay and reduced net funding costs from its recapitalisation plan.
Summers is tasked with turning around the struggling grocer, which has been losing market share to bigger rivals like Shoprite (SHPJ.J), opens new tab for more than a decade.
Trading losses in the group’s Pick n Pay business grew 9.1% to 718.9 million rand, largely due to a contraction in gross profit margin. Meanwhile, turnover inched down by 0.3% to 36.3 billion rand. Like-for-like sales growth was 0.5%, it said.
Pick n Pay has seen encouraging improvement in the underlying performance of its company-owned supermarkets.
Summers said the company was confident that it will halve the 1.5 billion rand trading loss in the Pick n Pay business recorded last year, due to the absence of a number of costs.
Pick n Pay expects to close fewer than 30 stores this year, most of which are loss-making. About 70 stores will be converted to Boxer stores or made into franchise stores. In the first half, about 14 underperforming stores were closed.
The group’s overall success is highly dependent on the performance of its core Pick n Pay supermarket business.
Summers said he was seeing early signs of recovery.
($1 = 17.7156 rand)
