S.Africa: Massive JEWISH Supermarket Chain: Pick n Pay shutting down supermarkets across South Africa

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Pick n Pay announced that it had closed 24 supermarkets, including 10 corporate stores and 14 franchise stores, over a 26-week period,

This was revealed in a Pick n Pay trading statement for the 26 weeks ending 25 August 2024, released Tuesday after the markets closed.

The trading statement was not good. Pick n Pay’s earnings per share (EPS) are expected to decrease between 30% and 40% year-on-year.

The retailer’s headline loss per share and diluted headline loss per share are also expected to be worse than last year.

The company’s Pick n Pay segment continued to struggle, causing the poor performance. In comparison, Boxer did well.

Boxer sales grew 12.0%, driven by strong like-for-like sales and complemented by new store openings.

Boxer opened twelve net new stores during the period and anticipates a ramp-up in new store openings in the second half of the year.

In comparison, Pick n Pay sales declined by 0.3%, with Pick n Pay South Africa sales increasing by 0.1%. Like-for-like sales in South Africa were slightly higher at 1.1%.

Pick n Pay sales growth lagged like-for-like sales because it closed 24 net supermarkets during the period. It included 10 corporate stores and 14 franchise stores.

The Pick n Pay store closures were expected. Earlier this year, the retailer announced that it would close or convert over 100 Pick n Pay stores.

Pick n Pay CEO Sean Summers explained their turnaround plan involves closing 35 underperforming Pick n Pay stores and converting 70 outlets to the Boxer brand.

They have identified many stores in critical condition due to factors like demographic changes or a problem with the shopping centre.

“These stores will be closed. We will close and get rid of the stores that have no future,” Summers said.

He added that they will not make the same mistake as in the past to convert these struggling stores into franchises.

“You merely end up with an extraordinary franchise debt and franchisees under too much pressure,” he explained.

Pick n Pay is also rolling back many of the changes implemented under its Ekuseni strategy, including changing Qualisave stores back to Pick n Pay stores.

Pick n Pay CEO Sean Summers
Despite the poor trading update, Pick n Pay remains upbeat about the prospects of the struggling retail group.

It said a key turnaround indicator the group targets within the Pick n Pay SA segment is like-for-like sales growth in Pick n Pay SA supermarkets.

“The Group is seeing steady improvement in this metric, from -0.4% in H2 FY24 to +1.3% for the period,” it said.

Company-owned Pick n Pay supermarkets, which account for most reported Pick n Pay segment sales, have underperformed in recent years.

“As a result of improved retail operations, like-for-like sales growth for this segment increased from -0.5% to 3.1%,” Pick n Pay said.

However, there were also challenges. Like-for-like sales growth in franchise supermarkets declined by 1.4%, which Pick n Pay described as disappointing.

“Over recent years, company-owned supermarkets have rarely outperformed franchise stores,” Pick n Pay said.

The retailer said this reversal confirms the early progress in the turnaround of company-owned supermarkets.

Pick n Pay said that revitalising the performance of franchise stores is now a key current priority.

The retailer expects to release its results for the first half of its 2025 financial year on Monday, 28 October 2024.

Source: https://dailyinvestor.com/retail/66742/pick-n-pay-shutting-down-supermarkets-across-south-africa/?source=newsletter