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IOL News
26-05-2025
- Business
- IOL News
Pick n Pay's turnaround strategy: aiming for profitability by 2028
Pick n Pay Retail giant Pick n Pay, which is in the throes of an operational turnaround, hopes to achieve trading profit break-even in its 2028 financial year. Image: Supplied. Pick n Pay's turnaround is taking shape, but initial estimates predicting the retailer would reach breakeven in the 2027 financial year have proven over-optimistic. The group now forecasts this milestone will only be achieved in 2028. The group's pre-tax and capital items loss improved to R237 million for the 52 weeks ending March 2, compared to a R1.4 billion loss in 2024. This improvement was driven by a R1bn reduction in the Pick n Pay segment trading loss, supported by a 27.3% decrease in interest paid as the recapitalisation began to impact debt service costs. CEO Sean Summers, who announced on Monday that he has extended his contract until May 2028, said in an interview the initial target date of 2027 was an uninformed estimate. The group now has a clearer understanding of what is required to return to profitability. Summers said that he extended his contract to ensure continuity. If he were to leave in October next year as initially planned, he would have needed to start searching for a new CEO in six to nine months, which he felt was too soon during the turnaround process. 'There are no surprises in this result; we are meeting the guidance we have provided every six months, making calm and steady progress. You cannot rely on quick wins in our situation, and it will continue to be a journey as we rebuild our institutional memory,' said Summers. He emphasised their strategy is to build 'muscle memory for long-term success,' saying that there would be no 'quick fixes.' The group now anticipates reaching trading profit breakeven in the 2028 financial year, compared to the previous forecast of 2027. Video Player is loading. 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Advertisement Next Stay Close ✕ Ad Loading Analysts Anchor Capital investment analyst Robbie Proctor said the improvement in like-for-like sales in the second half of the previous year had continued into the first two months of the current year, which is encouraging. While Pick n Pay's market share is expected to decline as it closes stores, the core store estate is still showing signs of life. 'Pick n Pay remains a well-known brand, providing credibility to any turnaround effort. However, we believe Pick n Pay has a market segmentation issue under a single banner, relative to Shoprite with its Checkers, Shoprite, and Usave brands, which effectively segment the market offering,' Proctor said. Umthombo Wealth chief investment officer Alex Duys remarked that Pick n Pay delivered commendable results, 'exceeding many of our expectations.' He added: "Considering that management had to navigate the complexities of raising equity, preparing for the Boxer IPO, and executing an operational turnaround - all with limited resources - this performance is a testament to the remarkable efforts of the entire team.' Duys said Pick n Pay management have maintained a long-term strategic focus. 'Rather than opting for superficial fixes to boost short-term results, they are committed to implementing the necessary structural changes to ensure sustainable success,' he said. 'This was an important year as we executed the first leg of our operational and financial recovery. We are exactly where we said we would be when presenting the strategy last May, and in some aspects, we are tracking slightly ahead. Particularly pleasing is the reduction in our Pick n Pay trading loss by 64% after predicting a 50% reduction,' Summers said. He said they have addressed around 40 Pick n Pay stores through conversion, closure, or repositioning, with approximately 30 more loss-making stores still to tackle. Six turnaround priorities The first of six turnaround priorities announced in May last year was to recapitalise. A two-step recapitalisation plan—raising R12.5 billion through the Pick n Pay rights offer (R4bn) and the Boxer JSE listing (R8.5bn)—was achieved, restoring the group to a net cash position of R4.2bn. 'We have started to give much-needed attention to our core Pick n Pay supermarkets, and we are pleased to see early results reporting positive like-for-like sales growth, notwithstanding the sustained pace of new store openings by our competitors in a restrained and competitive market,' Summers added. The second priority was to accelerate like-for-like sales growth, with the group turnover for the 53-week period rising by 5.6%. Over the past 18 months, Pick n Pay's company-owned supermarkets delivered gains in like-for-like sales growth, improving from -0.5% in the second half of 2024 to +3.6% in the second half of 2025. Inflation in Pick n Pay recorded at just 2.1% for the 2025 financial year, sharply down from 8.2% in 2024 and well below Statistics SA Food CPI of 3.9%. The third priority was the store estate reset, which involved converting to Boxer, franchising, or closing stores with no prospect of returning to profitability. The retailer has also begun opening and committing to new stores and will increasingly refurbish its supermarkets. The fourth pillar of the strategy is leadership and people, focusing on driving operational execution and restoring institutional memory. Key steps had been taken, including reinstating regional leadership structures and launching a campaign to reignite employee purpose. The fifth pillar, strengthening partnerships, was demonstrated in the tie-up with FNB e-Bucks. There was a 48.7% growth in online sales for the 53 weeks, led by asap! and PnP groceries on Mr D. Pick n Pay asap! has grown to 600 locations, and franchisee adoption of asap! has doubled in two years, unlocking new growth potential. Pick n Pay Clothing delivered 11.6% growth from standalone stores and reported market share gains. Thirty additional company-owned stores during 2025 brought the total estate to 415 stores. "Pick n Pay has over R4.3 billion in cash at its disposal to invest in pricing to attract shoppers. Given the subdued consumer backdrop, people are actively seeking deals when planning their weekly or monthly shop. There is a risk that Shoprite will need to follow a portion of the promotional activity, putting pressure on margins.," said Proctor. Duys said Pick n Pay's current focus did not appear to be on aggressively competing for market share but rather on driving efficiencies and enhancing the overall quality of its portfolio. 'We expect Pick n Pay to shift its focus back to regaining market share only once its operational turnaround is complete. At that point, the business will be far better positioned to compete effectively across all areas, supported by a more robust and efficient foundation,' Duys said. Visit: BUSINESS REPORT
Mail & Guardian
13-05-2025
- Business
- Mail & Guardian
SA's unemployment rate edges up to 32.9%
File photo South Africa's official The number of employed people decreased by 291 000 to 16.8 million quarter-on-quarter, while the number of people without jobs increased by 237 000 to 8.2 million, Jobs in the formal sector fell by 245 000, and losses were also recorded in trade (194 000), construction (119 000), private households (68 000) and community and social services. Employment however increased by 17 000 in the informal sector. Jobs were also added in transport (67 000), finance (60 000) and utilities (35 000), Stats SA said. The increase in the unemployment rate shows that South Africa 'continues to grapple with a relentless rise in unemployment, casting a shadow over the country's recovery efforts', Casey Sprake, an economist at Anchor Capital, said in a statement. 'While recent key reform measures point to a more positive trajectory, this progress has not yet trickled down to many South Africans in the form of job opportunities,' she said. 'Structural challenges, such as a skills gap, labour market rigidities, and the lingering impact of the Covid-19 pandemic, have exacerbated unemployment rates, especially among the youth.' Young people aged 15 to 34 years remain particularly vulnerable in the labour market, the statistics agency said. The number of unemployed youth increased by 151 000, while that of young people with jobs fell by 153 000. This translated to the youth unemployment rate increasing to 46.1% from 44.6% previously.
IOL News
07-05-2025
- Business
- IOL News
Investments into Africa boom amid countries seeking to escape Trump tariffs
Africa is seeing a surge in investments from North America, the Middle East, and from mid-sized asset managers and asset owner who are hungry for better yields and risk diversification. Image: IOL Investment into Africa is growing as on the back of the negative effects of United States' President Donald Trump's imposition of wide-ranging tariffs – which have resulted in that country becoming a less attractive investment destination. Africa is seeing a surge in investments from North America, the Middle East, and from mid-sized asset managers and asset owner who are hungry for better yields and risk diversification. The attraction of emerging markets can be seen in the recent relative strength of the rand, which is trading at about $18.25 on general dollar weakness. Anchor Capital's chief investment officer, Nolan Wapenaar, said: 'At the moment it is about our strong terms of trade and a returning risk appetite that are the themes we are watching.' Africa is seeing a surge in investments from North America, the Middle East, and from mid-sized asset managers and asset owner who are hungry for better yields and risk diversification. Image: World to Africa Survey A recent World to Africa survey study by The Value Exchange, in partnership with Standard Bank, showed that 63% of allocators of investments said they invested in Africa in 2024, up from 57% in 2021. The report, released on Wednesday, showed that billions of dollars are queued for investment into Africa, with half of investors poised to move quickly. 'The prospects for growth are immediate and positive,' it said, adding that current inflows were 'just the start'. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ Trump's tariffs, announced on April 2, has sparked comment that America's trading partners, such as Europe and China, will seek out other markets. While the US President announced a 90-day truce the day after what he called 'Liberation Day,' this did not apply to China, which faces a total of 245% import duties to the US. Hari Chaitanya, head of investor services product management at Standard Bank, said 'Africa's growth story is no longer a distant aspiration but a dynamic reality, driven by investment flows, expanding portfolios, and a shift in global perception. With Institutional investors and asset managers at the forefront, the continent is experiencing unprecedented momentum.' Chaitanya added that a surge in investment flow 'underscores Africa's emergence as a core strategy for global markets, fuelled by its rich resources, growing digital economy, youthful population, and the promise of economic integration through initiatives like African Continental Free Trade Area'. This comes as Kenyan President William Ruto has called for a revitalised Sino-African partnership, anchored in infrastructure-led development, industrial value chains and minerals beneficiation, that reflects the continent's rising agency and ambition. 'If the first half of this century belongs to China, the second half will belong to Africa,' Ruto said. There have increasingly been closer political, security and economic ties between China and African nations. Trade between China and Africa increased by 700% during the 1990s, and China is currently Africa's largest trading partner. Delivering a keynote address at Peking University on his recent state visit to China, President Ruto argued that Africa must seize the moment to shape a new global order founded on mutual respect and strategic cooperation that will benefit the continent. 'This is a time of profound and accelerated global change; within these challenges are opportunities for renewed partnership, bold thinking and a reimagined global architecture,' Ruto said. 'We must not only build the roads and rails of trade, but also the industries and value chains that ensure Africans own a greater share of the economic upside,' Ruto said. China is now Sub-Saharan Africa's largest trading partner, with over 3 000 Chinese firms, primarily private sector, operating across the continent. Ruto acknowledged these growing economic ties but cautioned that they must evolve to reflect Africa's developmental priorities, demographic shifts and environmental vulnerabilities. Yet, Ruto has issued a strong critique of global governance institutions, arguing that bodies like the UN Security Council and Bretton Woods institutions have failed to serve the interests of Africa and the Global South. He called for a more democratic, representative and transparent global architecture, one where Africa's voice carries weight. IOL
IOL News
24-04-2025
- Business
- IOL News
VAT reversal: Govt's R75bn hole will affect essential services and developmental objectives
Government will now have to find some other way of plugging a revenue hole of at least R75 billion after bowed to pressure and scrapped an increase in VAT. Government will now have to find some other way of plugging a revenue hole of at least R75 billion after it bowed to pressure and scrapped an increase in Value Added Tax (VAT), which economists said will have adverse effects on essential services such as teaching and nursing. Seemingly overnight, National Treasury reversed course on a proposed 0.5 percentage point increase in VAT, which would have taken the tax to 15.5%. Finance Minister Enoch Godongwana's reversal means that other measures to cushion the poor against the proposed hike will have to be reversed, while 'other expenditure decisions [will need to be] revisited,' the statement said. Old Mutual chief economist, Johann Els, said the fact that VAT would not be increased 'was not necessarily a win because R75 billion needs to be made up in some other way'. This, said Els, could take the form of 'significant cutbacks in spending that was planned, especially in terms of extra nurses and extra teachers, or some of the revenue components that were announced in terms of mitigating the pain of that for taxpayers'. Els said some of the changes could include a petrol levy increase, while there might also be a reversal of additional goods being added to the VAT exempt basket. In the March 12 National Budget – the second tabling of the revenue and expenditure framework after the February one wasn't passed – National Treasury said it would expand the list of VAT zero-rated food items to include more meat and vegetable products. Casey Sprake, economist Anchor Capital, told IOL that scrapping the VAT increase introduced a range of fiscal and economic challenges. While welcome news for consumers, it resulted in a significant deterioration of South Africa's fiscal position, she said. 'Crucially, the social support measures that were designed to mitigate the regressive impact of the VAT hike – particularly for lower-income households – are now redundant and will likely be withdrawn. In their place, the government will need to identify alternative areas for fiscal adjustment, many of which may come at the expense of key developmental priorities,' said Sprake. Sprake added that National Treasury will be compelled to implement expenditure cuts. These are most likely to affect frontline public services and infrastructure investment, which are sectors already under considerable pressure. Els said that the proposed increase wouldn't have been materially negative in terms of consumer spending or inflation, given measures to assist the poor. However, Investec chief economist Annabel Bishop had worked out that a 50bps increase this year as well as one in 2026 would have increased inflation by 0.25 percentage points for each year. Inflation was 2.7% in March, down from 3.2% in February as it continued a declining trajectory. Sprake added that there would be hidden costs for businesses that had begun updating their pricing systems, financial models, and customer communication strategies to accommodate the VAT change. They would now need to 'undertake the same process in reverse,' she said. 'These operational disruptions translate into unnecessary compliance costs, lost productivity, and added complexity for the private sector; costs borne not by the state, but by the broader economy,' said Sprake. The South African Chamber of Commerce and Industry said in a statement that 'we are not yet convinced that enough expert work has been undertaken to investigate and look at expenditure throughout the government service'. Sprake added that 'this episode underscores a recurring concern: the economic cost of policy uncertainty and reactive governance.' National Treasury's backtracking of an increase followed the start of a court case on Tuesday in which both the Democratic Alliance and Economic Freedom Fighters – political polar opposites – took Godongwana as well as the South African Revenue Service to court to get the increase reversed. The parties had argued that the increase would harm the poor. IOL Business
Associated Press
27-01-2025
- Business
- Associated Press
Anchor Capital Supports Governance Enhancements at Daktronics
Anchor Capital Advisors, LLC (collectively with its affiliates, 'Anchor Capital'), which is a shareholder of Daktronics, Inc. (NASDAQ: DAKT) ('Daktronics' or the 'Company'), today issued the following statement regarding its support of shareholder-driven governance enhancements at Daktronics: 'Anchor Capital appreciates the positive conversations we have had with Daktronics' management. We believe the Company, and its stakeholders, would greatly benefit from adding shareholder-supported board members, who would bring fresh perspectives to help address Daktronics' undervaluation. We would also support implementing a de-classified board structure in alignment with our proxy voting guidelines, and strong corporate governance. In our view, it is important that Daktronics remain incorporated in South Dakota at this time – and consider moving to Delaware at a later date – to allow for swift shareholder-driven governance enhancements. As a firm, we believe reincorporating right now would diminish the voices of non-insider shareholders and stymie progress for positive changes backed by a number of top shareholders. We view the proposed enhancements mentioned above as highly beneficial to the Company, aligned with shareholders and essential to Daktronics' long-term success.' Founded in 1983 and based in Boston, Anchor Capital is a long-only, value-oriented investment management firm. Anchor Capital has assets under advisement of $5.0 billion and assets under management of $2.4 billion as of 12/31/2024. SOURCE: Anchor Capital Advisors, LLC Copyright Business Wire 2025. PUB: 01/27/2025 08:00 AM/DISC: 01/27/2025 08:02 AM
