By Radarr Africa Business Desk
LAGOS, October 27 (Radarr Africa) – South African grocer Pick n Pay narrowed its first-half headline loss by 32 per cent to R299 million (about $18 million), as cost cuts and a stronger value business lifted trading profit, Reuters reported on Monday.
The retailer reported results for the 26 weeks ended August 30. Trading profit rose 58 per cent to R490 million, gross margin improved by 0.7 percentage points to 18.8 per cent on a better product mix and supply-chain gains, and group turnover grew 2.4 per cent to R60.5 billion, according to Reuters, which carried the story on CNBC Africa.
Sales at Boxer, the value retail chain in the group, rose 6.3 per cent. Sales at the core Pick n Pay business were broadly flat after strategic store closures, Reuters said. The company’s share price was up 4.3 per cent at R22 by 11:34 GMT.
Chief executive Sean Summers, who leads the turnaround, said customers were choosing the retailer more often. “Customers are increasingly choosing Pick n Pay,” Reuters quoted him as saying.
Summers also estimated that the conflict in the Middle East, which has raised fuel costs, cut sales growth by about 3 per cent, Reuters reported. Each 1 per cent loss in sales growth costs the company roughly R140 million to R150 million in income, he said. Chief financial officer Tina Rookledge told Reuters the retail environment remained challenging, with consumers under pressure even as food inflation sits at a 16-year low.
The company introduced more than 50 new or upgraded fresh food lines during the year, Reuters reported. A new store labour model, agreed with unions, takes effect on November 1, and management says it will improve staffing flexibility and costs. Summers expects significant further turnaround benefits over the next two and a half years, according to the report.
The labour model follows a dispute earlier in the year. The Eyewitness News (EWN) website reported on October 23 that Pick n Pay had withdrawn its proposed retrenchment consultation process, which had affected around 22,000 store-based employees, after reaching an agreement with the South African Commercial, Catering and Allied Workers Union (SACCAWU), which EWN described as the retailer’s primary labour partner. EWN said the process under section 189A of the Labour Relations Act began in May as part of the turnaround strategy, and that Employment and Labour Minister Nomakhosazana Mthethwa intervened in June to help facilitate negotiations. The report did not give further terms of the agreement and said more details were expected in the interim results.
EWN also reported that the company had said it expected the headline loss per share for the first half of its 2027 financial year to narrow by 25 per cent to 35 per cent.
Reuters described Pick n Pay as South Africa’s second-largest grocer by southern African turnover. It said the company has lost market share over several years and has struggled with weak store performance. The recovery plan includes cost cuts, store closures, a revamped fresh food offering and better inventory management, the last of which has reduced stock and freed up working capital, Reuters said.
Reuters converted the rand figures at an exchange rate of R16.5804 to the dollar.
