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 fell 1.6% to ZAR 74 billion. Profit before tax and capital items was ZAR 360 million, versus a ZAR 237 million loss last year, driven mainly by a ZAR 681 million positive swing in net funding interest; this was partly offset by a ZAR 74 million increase in trading loss. Pick n Pay’s trading loss increased to ZAR 953 million from ZAR 549 million, and headline earnings were a ZAR 386 million loss, improving 5.4% year on year. Gross profit margin improved 40 basis points, but like-for-like expenses rose 6.7% against like-for-like sales growth of 3.1%. Cash on hand was ZAR 3.1 billion at group level, including ZAR 2.4 billion for Pick n Pay; Pick n Pay ended with ZAR 2.5 billion cash on hand and used ZAR 2 billion of free cash flow during the period. For FY27, management said Pick n Pay cash burn is expected to be roughly in line with FY26, CapEx is guided to rise to ZAR 1.4 billion from ZAR 0.8 billion, and the company is focused on getting the segment to cash flow breakeven before considering future Boxer-related capital allocation questions.

Sean Summers framed the year as another step in a multiyear turnaround, saying the company has moved from survival concerns to visible recovery in top-line sales and brand relevance. He emphasized that Pick n Pay still has a negative “jaws” problem, with expenses rising faster than sales, and said the final major hurdle is the labor-cost reset through the Section 189 consultation process. His tone was candid and forceful, mixing optimism about progress with repeated reminders that the work is not finished and that the company must become a better-run, more sustainable retailer.

Lerena Olivier focused on the numbers behind the recovery: group turnover of ZAR 120 billion, PBT and capital items of ZAR 360 million, headline earnings loss of ZAR 386 million, and a ZAR 681 million net funding interest benefit from the prior recapitalization. She highlighted improved gross margin of 40 basis points, tight working-capital control, inventory down 2% excluding acquisitions, and cash of ZAR 3.1 billion at year-end, with ZAR 2.4 billion belonging to Pick n Pay. She also said Pick n Pay used ZAR 2 billion of free cash flow, more than the original ZAR 1.6 billion guidance, mainly because operations were weaker than expected in the peak trade period, and that FY27 cash burn should be roughly in line with FY26 despite higher CapEx and diesel pressure.

Analysts focused heavily on the Section 189 labor process, asking whether it implied retrenchments, how many jobs were at risk, and what would happen if labor talks failed. Management said the process is intended as a consultation period, not a job-cut target, and that the goal is to reset terms and conditions to make the business sustainable; Sean Summers said they expect to reach agreement within 60 days, though the pressure is on. Other questions centered on Boxer share unbundling, franchise weakness, diesel-driven inflation, and capital allocation; management said it is comfortable holding 53% of Boxer for now, is not planning a broad franchise buyback, and expects diesel costs and inflation to remain a material headwind.