Pick n Pay Financial Losses Cut Despite e-Commerce Threat – More Store Closures in South Africa?
In the face of growing pressure from e-commerce sites like Takealot and Amazon, Pick & Pay is advancing with a revolutionary turnaround...
Quick overview
- Pick n Pay is implementing a turnaround strategy to reduce losses and adapt to increasing e-commerce competition from platforms like Takealot and Amazon.
- The company reported a significant reduction in losses, from R3.3 billion to R736 million, indicating that its recovery measures are starting to take effect.
- In 2025, Pick n Pay closed or converted 40 underperforming stores and successfully raised capital through a R4 billion rights offer and an R8.5 billion IPO for its Boxer chain.
- Despite ongoing challenges, Boxer’s strong performance is providing essential support to Pick n Pay as it navigates its recovery phase.
In the face of growing pressure from e-commerce sites like Takealot and Amazon, Pick & Pay is advancing with a revolutionary turnaround strategy, significantly cutting its losses and reconfiguring its retail base.
Strategic Overhaul Amid Changing Consumer Habits
As South African consumers shift more comfortably into the digital age of shopping, traditional retailers are feeling the pinch. The rise of online marketplaces like Takealot and the local launch of Amazon.co.za has placed added strain on grocery chains such as Shoprite, Woolworths, and particularly Pick n Pay. In response, Pick n Pay has accelerated its recovery plan, focusing on cost efficiency and trimming underperforming stores.
Return to Operational Discipline
For the fiscal year ending March 2, 2025, Pick n Pay reported an attributable net loss of R736 million (approximately $20 million). While still a deficit, it marks a sharp improvement from the R3.3 billion loss recorded the previous year. Headline losses have shrunk by over 60%, suggesting that the retailer’s aggressive measures are beginning to bear fruit.
A major shift came in the second half of FY25, when the Pick n Pay segment swung back to a trading profit, reversing previous losses. Over the full year, the trading deficit was reduced to R549 million from R1.5 billion in FY24. Meanwhile, the group’s overall loss before tax and capital items also narrowed significantly, from R1.4 billion to R237 million.
Bold Capital Moves and Store Restructuring
2025 has been described by company officials as a turning point, highlighted by successful fundraising efforts, including a R4 billion rights offer and an R8.5 billion IPO for Boxer, Pick n Pay’s more affordable retail chain. Interestingly, Boxer’s current market capitalization of R30 billion now surpasses Pick n Pay’s own valuation of R21 billion—reflecting where investor optimism lies.
A key part of Pick n Pay’s strategy involved reconfiguring its store portfolio. The company shuttered or converted 40 underperforming stores. Specifically, 25 company-owned supermarkets were closed, seven were transitioned into franchise operations, and eight were rebranded as Boxer outlets. In total, Boxer absorbed 15 former Pick n Pay sites, including eight supermarkets and seven liquor stores.
Financial Highlights Reflect Gradual Stabilization
Group turnover rose by 5.6% year-on-year to R118 billion, driven mostly by Boxer, which contributed 13.2% to growth. In contrast, Pick n Pay’s contribution was more modest at 1.9%. Gross profit margins edged up by 0.3% to 18.4%, with gross profit in rand terms increasing by 7.3%.
Other income climbed by 11.6%, and trading expenses were contained to a 1.9% rise. The stability in operating costs was aided by flat property expenses and a notable decline in credit loss provisions.
Boxer Strength Cushions Group Results
Boxer continues to be the outperforming segment. Its R2.3 billion trading profit was partly offset by Pick n Pay’s R549 million loss, leaving the group with a combined trading profit of R1.8 billion. Nonetheless, Boxer’s performance is providing crucial support and investor confidence as Pick n Pay progresses through its recovery phase.
Conclusion: A Transitional Year with Promising Signs
2025 marked a meaningful shift in Pick n Pay’s fortunes. While the group is not yet back in the black, the narrowed losses, decisive restructuring, and Boxer’s surge present strong indicators that the company is on a more stable trajectory. With the local e-commerce landscape intensifying, Pick n Pay’s next challenge will be adapting to evolving shopping behaviors while maintaining operational momentum.
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