Rédaction Africa Links 24 with Georgina Crouth
Published on 2024-02-23 14:13:38
Struggling retailer Pick n Pay is taking bold steps to address its financial challenges by approving a capital raise and planning a separate listing of its Boxer discount division. The company, which recently reported its worst results since being listed on the JSE in October 2023, is aiming to stabilize its balance sheet and unlock shareholder value.
Despite these efforts, Pick n Pay’s share price has experienced volatile movements, with a significant drop followed by a slight recovery. The proposed two-step equity capital raise, including a listing of Boxer’s shares on the JSE, is seen as a crucial move to improve the company’s financial position. Pick n Pay intends to retain a majority stake in Boxer after the initial public offering and aims to raise around R4 billion through this process.
The terms of the capital raise are still being finalized and are subject to board, shareholder, and regulatory approvals. The Ackerman family, who holds the majority shares in the company, has expressed support for the initiative. More details about the capital raise will be disclosed after Pick n Pay’s full-year results are released in May.
CEO Sean Summers, who returned to the company in October, warned of a challenging road ahead after the company’s trading profit plummeted by 97.5% in six months. He acknowledged that it would take significant effort and time to steer Pick n Pay back on track as the company had lost touch with its customers, employees, and suppliers. Despite the hardships, Summers remains optimistic about the company’s future prospects.
In a recent statement, Pick n Pay highlighted the disappointing trade performance of its supermarkets business, citing a decline in sales and increased inventory levels. The company’s net debt has also increased substantially, prompting the need for restructuring and stabilization of the balance sheet. The recent sale of property and progress in reducing inventory levels have helped improve the net debt position, but more work is needed to address the financial challenges.
The decision to list Boxer is part of Pick n Pay’s revamped strategy, which involves a restructured leadership team and an operational structure focused on enhancing in-store execution and customer service. Despite the financial setbacks, Boxer has shown strong sales growth, as have Pick n Pay Clothing stores and Pick n Pay Online.
The company’s partnership with Mr D and the successful relaunch of the asap! delivery platform have contributed to the growth of Pick n Pay’s online business. These initiatives, along with the planned capital raise and Boxer listing, demonstrate Pick n Pay’s commitment to overcoming its financial difficulties and positioning itself for long-term sustainable growth.
Read the original article on Daily Maverick
