Boxer Packs a Punch as Pick ‘n Pay Struggles

Pick n Pay Stores Ltd’s (JSE: PIK) full-year (FY24) results were a mixed bag. Group turnover grew 5.4%, but profitability plummeted, with trading profit down 87.4%. Rising expenses and shrinking margins were to blame, further squeezed by a near 200% increase in interest payments due to higher gearing and interest rates.

However, Boxer, Pick n Pay’s discount chain, thrived with a 17.3% sales increase to R1.9 billion. This highlights the struggles of the core Pick n Pay supermarkets, impacted by flat sales and declining margins.

In response, Pick n Pay launched a turnaround plan. It focuses on operational efficiency, targeting over 100 loss-making stores for closure or conversion. Additionally, a two-step recapitalization plan aims to cut interest costs and unlock Boxer’s value.

Early signs in FY25 are encouraging, with like-for-like sales growth exceeding FY24. But a multi-year recovery is likely. Pick n Pay’s past success suggests potential, and the restructuring efforts provide a clear path forward. Investors will watch closely as Pick n Pay navigates the economic climate and executes its turnaround plan.

Sources: Pick n Pay Stores Ltd, Reuters, MoneyWeb

Piece Written By Nkosilathi Dube, Trive Financial Market Analyst

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