Pick n Pay has settled a labour dispute that has hung over the weakened retailer for about five months. And done so while reporting a narrower half-year loss and a stronger balance sheet amid early signs that shoppers are returning.
Announcing interim results on Monday, CEO Sean Summers said a section 189 process potentially affecting the retailer’s 22,000 employees had been withdrawn after a settlement with the company’s national negotiating committee of shop stewards. It means no retrenchments of workers, who had spent months under what he called a “sword of Damocles”.
The terms are confidential, but, said Summers, include flexibility: staff will work when stores need them, rather than on fixed Monday-to-Thursday rosters topped up with temporary weekend labour. The agreement also covers next year’s wage settlement.
Still, analysts who pressed for savings figures got none. Summers and newly appointed CFO Tina Rookledge said no benefit is included in the current financial year, with everything expected in FY28.
Anchor Capital analyst Steph Erasmus says: “The big elephant in the room is obviously the labour agreement and exactly what that looks like and what the numbers are. It’s not ideal not to have those numbers now, but I can understand the commercial sensitivity.”
But news of the deal, alongside a 58% jump in trading profit, helped drive Pick n Pay’s shares up over 7% by mid-afternoon.
Rookledge, presenting her first results after 82 days in the job, said gross profit grew faster than expenses, a sign that operating leverage is “starting to come through”.
A 70 basis point increase in gross margins helped cut Pick n Pay’s headline loss by almost a third, to R299m. Group turnover rose 2.4% to R60.5bn, with like-for-like growth of 1.8% for the 26 weeks ended August 30 2026. Boxer, of which Pick n Pay still owns 53.1%, grew sales 6.3%, while Pick n Pay’s own sales were broadly flat at R36.4bn, although like-for-like growth crept up by 2%.
Cash flush
The group ends its interim period with R10bn in cash, up from R6.9bn in March. That includes R4.7bn from the sale of a 12.5% stake in Boxer. Even excluding that, Pick n Pay’s underlying net cash improved by about R600m, helped by lower inventory and tighter receivables.
“We are no longer financially constrained,” said Rookledge, although she cautioned that part of a R2.7bn working capital inflow will reverse in the second half and should not be extrapolated. Pick n Pay will keep burning cash through the turnaround, and its guidance for breakeven in FY29 is unchanged.
Still, Summers has ruled out further sales of its prime Boxer stock or other assets, a view shared by Erasmus.
“At this stage, they should be OK for cash until their guided breakeven point,” he tells the FM.
That’s not to say the trading backdrop isn’t tough. May’s fuel price hike slowed sales sharply, and Summers said the conflict in the Middle East has cost the group at least 3% in sales growth. Every 1% of sales lost costs up to R150m in income, he said. Clothing, where like-for-like sales fell 0.7%, remains weak, although the trend has improved and the Shein and Temu tsunami has ebbed, according to Summers.
On the plus side, Pick n Pay says sales in the first four weeks of its second half have run slightly ahead of the first-half pace, with like-for-like growth ahead of the market — despite what Summers describes as a “carpet bomb” of new openings from its competitors.
Estate plans
For now, Pick n Pay’s store makeup is split equally between franchise and corporate stores, but Summers expects a tilt towards corporate ownership, taking the ratio towards 75:25.
Erasmus, for one, sees opportunity in the retailer’s “estate”.
“It sounds like there’s quite a bit of opportunity to downsize the stores when leases come up for renewal,” he says. “If they can maintain the same sort of sales, as Summers intimated, that’s a very different cost base, which would be positive.” He also expects more franchise buybacks, with changes easier to roll out under a centralised command structure.
In a media briefing, Summers compared Pick n Pay to a tanker “taking a bit of water over the bow”. The Middle East conflict, he said, has brought choppier seas, but the company is getting its bow higher.
“There are many arrows that have been fired off in this company in the last two years,” he said, “and they’re starting to find their targets.”
‘Phenomenal’ Springbok sponsorship
When Summers was brought back in 2023, the question being asked over weekend braais was not whether the retailer would grow but whether it would survive. So when it committed to a six-year Springbok sponsorship, the bet was as much about nerve as marketing.
Speaking after the results, Summers said the courage to sign has been validated, with the partnership generating “amazing” pride among staff. The reach is also wider than the national men’s side: the deal extends to school rugby and women’s rugby.
Then there are the tills. Shoppers are, apparently, crowding stores for the latest Springbok collectables and albums (“It’s nuts,” Summers said), with Pick n Pay holding exclusive rights to the cheaper, more accessible end of official Bok merch.
Volumes, he said, have been “absolutely phenomenal”, although he gave no figures. Still, he told the FM, Pick n Pay has effectively recouped the cost of its Springbok sponsorship through merchandise sales, not to mention brand awareness in Vancouver, Sydney, Auckland and Hong Kong.
