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Pick n Pay said on Wednesday it expects to swing to a full-year loss as South Africa’s third-biggest grocer takes an impairment of R2,8 billion (US$155 million) on loss-making and underperforming core supermarket stores.
But the market cheered a debt restructuring agreement with lenders, pushing its shares up 9,40 percent.
New CEO Sean Summers is tasked with turning round a company that has been losing market share against bigger rival Shoprite and others for more than a decade in a highly promotional market as the economy struggles with high interest rates and rising inflation.
Specifically, he has to improve the performance of the core Pick n Pay supermarkets business.
Pick n Pay, which also owns discount grocery retailer Boxer, said the loss per share will range between R6,37 and R6.86 for the year ended on February 25, compared with earnings per share of R2,43 in the previous year.
About R1,8 billion of the writedown is for selected loss-making company-owned Pick n Pay stores, “which will be closed or converted to Pick n Pay franchises or Boxer stores under the group’s strategic plan,” it said.
And a R1 billion impairment of assets is for underperforming company-owned stores that will remain open, the retailer added.
Other factors contributing to the expected loss include incremental net debt service costs and diesel expenses to run generators that help keep stores open during blackouts. – CNBC Africa
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