The race is still on, and Pick n Pay is clawing back

16 September 2024 | News

As the story goes on, Pick n Pay is facing challenges to keep up with Checkers and Spar. Which is not helping with investment confidence.

Pick n Pay understands their difficulties in both expanding and keeping up with Shoprite's forward growth.

According to dailyinvestor.com, “Pick n Pay sales only grew 0.1% over the period. Like-for-like sales were slightly higher at 1.1%, while Pick n Pay South Africa sales increased 0.6% and 1.7% like-for-like. It expects earnings per share (EPS), headline earnings per share (HEPS), and comparable HEPS for H1 FY25 to decrease by more than 20%.”

The reason for Pick n Pays total sales trailing behind like-for-like sales was due to the closure of multiple stores. During the initial 21 weeks of the fiscal year, Pick n Pay shut down a total of 16 supermarkets. This included four corporate stores and 12 franchise stores.

Despite the decreased earnings compared to the previous year, the Pick n Pay is confident of significant improvement in their next year profit.

Surprisingly, there was a 19% rise in Pick n Pay's share price in 2024, though it does beg the question: would there be more growth in the future? Are there still risks investing in Pick n Pay?

They are currently in the process of catching up to Checkers in terms of store formats, supermarket appearance, and distribution methods.

With Sean Summers at the forefront, there is confidence growing in Pick n Pays comeback, but he does have a hard task ahead.

Gaining back consumers loyalty who have left to use alternative retailers, will mean significant effort and not an enviable task for anyone.

At the moment, Shoprite is actively expanding its store locations while Spar is redirecting its focus to the South African market as is Pick n Pay.

Competitiveness is key in every aspect. This industry heavily relies on price and margin. Those with the largest scale have a clear advantage over other retailers.

Pick n Pay is facing a decline that puts them at a disadvantage which means they have limited room for financial manoeuvring and have a huge challenge ahead. The positive for Pick n Pay is that Boxer and the clothing side of the business is still flourishing.