Pick n Pay Stores Limited

Group turnover was ZAR 120 billion, up 3.4% on a 52-week basis. Boxer turnover grew 12.3%, while the Pick n Pay segment turnover declined 1.6% and segment turnover was ZAR 74 billion. Profit before tax and capital items was ZAR 360 million, versus a ZAR 237 million loss last year, with a ZAR 681 million positive swing in net funding interest offsetting a ZAR 74 million increase in trading loss. Pick n Pay’s trading loss increased to ZAR 953 million from ZAR 549 million, trading profit for the group was ZAR 1.7 billion versus ZAR 1.8 billion last year, and headline earnings were a ZAR 386 million loss, improved 5.4%. Gross profit margin rose 40 basis points, internal selling price inflation was 1.9% versus CPI of 4.4%, and like-for-like volume growth in the Pick n Pay segment was 0.9%. The group closed with ZAR 3.1 billion cash; Pick n Pay had ZAR 2.4 billion cash, and management said the Boxer capital raise generated ZAR 4.7 billion and left roughly ZAR 7 billion on the balance sheet. For FY27, Pick n Pay lifted CapEx guidance to ZAR 1.4 billion from ZAR 0.8 billion in FY26, and management said cash burn next year is likely to be in line with the current year, though timing of labor restructuring and diesel costs could affect that.

Sean Summers framed FY26 as evidence that Pick n Pay’s recovery is real but incomplete, emphasizing that the company is still in a multiyear turnaround. He pointed to the return of like-for-like sales growth, stronger fresh food positioning, better franchise relationships, improved supply chain arrangements, and a renewed brand identity as signs that the business is rebuilding. His tone was upbeat but blunt, repeatedly saying the company still has major work to do, especially on labor costs and the expense base.

Lerena Olivier focused on the math of the turnaround: group turnover of ZAR 120 billion, PBT before capital items of ZAR 360 million, cash of ZAR 3.1 billion, and a ZAR 681 million net funding interest benefit from last year’s recapitalization. She said Pick n Pay’s trading loss widened to ZAR 953 million, but gross margin improved 40 basis points and losses avoided from the store reset were close to ZAR 180 million; she also cited ZAR 260 million of IFRS 16 lease profits and ZAR 235 million of once-off restructuring costs. On capital allocation, she said FY27 Pick n Pay CapEx is guided to ZAR 1.4 billion, up from ZAR 0.8 billion, with spending targeted at revamps, conversions, repairs, franchise acquisitions, and operational investment.

Analysts pressed management on the Section 189 labor process, asking whether jobs would be cut, what it was meant to achieve, and what happens if no agreement is reached. Summers said the process is intended to reset labor terms and conditions and is about saving the business, not cutting headcount, though he acknowledged the pressure is on and retrenchment notices would follow if the 60-day consultation failed. Questions also focused on FY27 cash burn, Boxer's stake sale, franchise distress, diesel inflation, and gross margin levels; management said cash burn should be roughly in line with this year, Boxer's proceeds are being held to fund the turnaround, there is pressure in smaller franchise stores, and Pick n Pay’s gross margin needs more improvement through mix, waste reduction, and operating efficiency.