Latest news with #R237
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
IOL News
24-04-2025
- Business
- IOL News
KZN Premier announces R86 million funding for Zulu Royal House Trust
KwaZulu-Natal Premier Thamsanqa Ntuli stated that the KwaZulu-Natal Zulu Royal House Trust (ZRHT) will receive R86 million in the financial year (FY) 2025 and 2026 from the Office of the Premier (OTP) budget of R817 million. Image: Supplied The KwaZulu-Natal Zulu Royal House Trust (ZRHT) will receive R86 million in the financial year (FY) 2025 and 2026 from the Office of the Premier (OTP) budget of R817 million. This was revealed by KZN Premier Thamsanqa Ntuli who delivered his budget vote for the OTP on Thursday. Ntuli said the OTP has also embarked on developing a centralised Provincial Forensic Framework that will ensure that all Forensic Investigations Units in the Province are centralized under the KZN OTP. Ntuli said that currently, some departments have their own Forensic Units and this duplicates resources spent in the province while leading to a lack of objectivity in reporting. Ntuli said the Medium-Term Development Plan (MTDP) outlined three key priorities: to drive inclusive economic growth and job creation to reduce poverty and tackle the high cost of living to build a capable, ethical and developmental state Ntuli said his vision was for KZN to take its place as a leading province, with its people exhibiting unmatched excellence and exemplary leadership The structures of the OTP and budget allocation include: Administration (R237 million); Institutional Development (R362 million) and Policy and Governance (R217 million). The OTP provides active support to the ZRHT. Ntuli said they will continue to explore medium-to long-term revenue-generating projects prioritising property development to ensure the long-term financial sustainability of the Zulu Royal Family. 'The trust will consider public-private partnerships, but private-sector participation will be prioritised in raising funds for medium to long term. The trust will continue to explore opportunities in commercial farming and create partnerships with provincial entities specialising in agriculture. Ntuli said the planning and co-ordination of a fundraising event to celebrate Zulu cultural heritage is underway, and the event is expected to take place in the 2025/ 2026 FY. There will be a focus to strengthen the Premier's Coordinating Forum (PCF) as the uppermost Inter-Governmental Relations (IGR) structure of co-ordination of all spheres by the Premier. 'The Operation Mbo project will continue to be the priority area to ensure the speedy finalisation of disciplinary cases. This includes continuous deployment of a multi-disciplinary crack team, training interventions and constant monitoring and monthly reporting,' Ntuli said. Ntuli said the OTP will intensify the implementation of the results of the skills audit focusing on catalytic training programmes such as the digital skilling of public servants, as well as interventions to address gender disparities especially in management positions across all government departments. 'To bolster our efforts to position our province to be a smart province, enormous strides have been made in implementing key components of the provincial digital transformation strategy. A major milestone in this journey has been the automation of essential tools, such as Operation Sukuma Sakhe's case management system, household profiling and war room functionality audit, which has improved service delivery by streamlining case handling and response times,' Ntuli said. The Forensic Investigations and Integrity Management will receive R44 million. Ntuli said the OTP was committed to the fight against fraud and corruption and will embark on numerous initiatives to curb this plague. This will be done through an approved forensic investigations framework. 'There are plans to intensify collaboration with law enforcement agencies on matters under criminal investigation. Consistent liaison will be conducted to assess the progress of the top priority cases and criminal investigations within the province which emanate from provincial forensic investigations,' Ntuli said.
