However, the Boxer chain was R1.9bn profitable compared to a R1.8bn trading profit for 2023.
JSE-listed retailer Pick n Pay suffered a R2 billion impairment for the year ended February 29, which worsened its trading losses for the period to R1.5bn although its budget grocer, Boxer, provided some respite.
Pick n Pay has been facing turbulent times in South Africa as consumers, hard hit by elevated inflation, trend down to budget options.
For the full year under review, Pick n Pay has had to skip a dividend.
Group chairman, Gareth Ackerman, said on Monday that the Pick n Pay Group had “delivered a weak FY24 result, driven by a substantial trading loss in the Pick n Pay business, which more than offset a strong performance from the Boxer” business.
While the Pick n Pay stores suffered a R2.8bn impairment, there were also additional higher interest charges as a result of its increased gearing.
Group turnover for the period was 5.4% firmer, driven by strong growth from Boxer which climbed up by as much as 17.3%, and a further 17% elevation from Pick n Pay Clothing standalone stores.
Nonetheless, the gross profit margin for Pick n Pay for the full year to February 2024 sank by 1.5% to 18.1%, while gross profits in rand terms declined 3.1% year-on-year.
And with trading expenses rising 11.9%, driven by substantially higher debtors provisioning and R307m of employee restructuring costs, the trading profit for the period declined by a massive 87.4% to R385 million.
However, the Boxer chain was R1.9bn profitable compared to a R1.8bn trading profit for 2023.
Last year, Pick n Pay posted a profit of R1.3bn.
“The Pick n Pay trading loss was primarily driven by flat Pick n Pay sales, trading expense growth exceeding sales growth, and gross profit margin contraction in that business,” Ackerman said.
Pick n Pay is now banking on the company’s recapitalisation plan which Ackerman said, “will see a sharp reduction of interest costs and generate resources to drive the Pick n Pay turnaround” program.
“Over 100 loss making supermarkets will either be closed or converted to Pick n Pay franchise or Boxer stores,” he added.
Meanwhile, Pick n Pay confirmed today that Ackerman Investment Holdings (AIH) - the controlling shareholder of Pick n Pay - had agreed to forego majority shareholder voting control of Pick n Pay, with the exact mechanism still to be finalised, such that their voting rights will fall slightly below 50% post the planned Rights Offer.
AIH will also relinquish the right to nominate the chairman, CEO and chief financial officer immediately.
This means that the representation of the Ackerman family on the Board of Directors will be reduced to three members from the 2024 financial year Annual General Meeting (AGM); these being Gareth Ackerman, Suzanne Ackerman and Jonathan Ackerman.
After 40 years of service including 14 years as chairman, Gareth Ackerman will retire from his role as chairperson of the board after the release of the 2025 financial year results, and has stepped down from the Nominations and Treasury committees with immediate effect.
Ackerman said the changes in the control structure were intended to support the business in its transformation under the leadership of CEO Sean Summers and his management team.
“The Ackerman family has for some time been considering the changing operating environment and the need for renewal at Pick n Pay, including at board level,” he said.
“On a personal level, I have been wanting to retire as board Chair for some time. I will stay on as Chairman to support the management through this period of transition until the publication of our FY25 results, after which I feel it will be the right time to hand over to new blood, while I continue to serve on the board.”
BUSINESS REPORT