Pick n Pay slumps after new target delayed

Pick n Pay fell after it delayed a key turnaround target by a year, tempering optimism that had driven the grocer’s stock higher ahead of the results.

Shares fell as much as 8% by 9:42 a.m. in Johannesburg, after gaining 14% on Friday when the retailer reported improved earnings guidance.

Investors are now weighing management’s warning that the core Pick n Pay supermarket business is only expected to reach break even on trading profit in fiscal 2029, a year later than previously targeted.

Read:
Pick n Pay pushes break-even back as core earnings stay weak
PnP sells down R4.7bn in Boxer to shore up turnaround
Pick n Pay sells off Boxer shares

The retailer said the delay reflects the timing of various initiatives but not a loss of confidence in its strategy. Still, the changed target illustrates the scale of the challenge facing Chief Executive Officer Sean Summers. His plan follows years of weak performance in the core supermarket division even as discount retailer Boxer Retail continued to gain market share.

Summers has focused on restoring Pick n Pay’s reputation for its bakery and butchery offerings as part of efforts to return the chain to its roots as “the fresh-food people.”

Group turnover increased 1.1% to R120 billion ($7.3 billion) in the year through March 1, while Boxer again outperformed with sales rising 9.6% to R46.68 billion.

The company warned that geopolitical tensions could affect the business through higher oil prices, inflation, and currency volatility. While the impact could not yet be quantified, Pick n Pay said the uncertainty didn’t cast doubt on its ability to continue as a going concern.

Read the Sens here.

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