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Pick n Pay chief executive officer Sean Summers is bullish after the mammoth, multi-year programme to turn around the struggling retailer has begun to show early signs of success.
The group has started shutting unprofitable supermarkets and could shrink its core company-owned Pick n Pay footprint by as many as 100 stores in the next three years.
Of this, 35 will be closed outright while another roughly 70 will be converted to either a franchise store or to the mass-market Boxer brand.
In the six months to August 25 it closed 14 of these underperforming stores and converted its first store to Boxer.
Summers says the group’s “estate is starting to make a great deal more sense”.
He stresses that the list of stores that will be shut is dynamic and will change. Some stores initially flagged for closure have since become profitable through “greater store discipline and execution” and will no longer be closed.
Landlords have been very supportive through the process and Summers says despite its missteps in recent years, the group has some “great real estate”.
He adds that even Pick n Pay stores that are marginal still contribute to turnover and profit. Some leases simply don’t make sense and the turnaround strategy appears to have afforded it the opportunity to exit these.
One example is the store at Hyprop-owned mall Hyde Park Corner.
Its closure attracted outsized attention – where half the space under the lease relates to legacy requirements like storerooms.
The landlord seemingly has no alternative use for the space (and cannot lease it separately), therefore it remains bundled with the lease (never mind that the store itself remains too large).
Summers says the group is not prepared to pay for space it doesn’t need.
Surprisingly, Pick n Pay says it will open “several new supermarkets” before the end of the year, with more to come in 2025. – Moneyweb
Online Reporter