Our opinion on the current state of PICKNPAY(PIK)
Pick 'n Pay (PIK) is a long-established retail grocery chain with a strong presence in South Africa and several stores across Africa. Founded by Raymond Ackerman in 1967, the brand once dominated South Africa's grocery retail space before being overtaken by competitors like Shoprite/Checkers. The company has brought Sean Summers back as CEO, hoping to leverage his leadership from his previous tenure (1999–2007) to steer Pick 'n Pay toward renewed growth and stability.
In its latest results for the 26 weeks ending 25th August 2024, Pick 'n Pay reported:
- Turnover up 3.7%
- Headline loss of 136.6c per share (versus a previous 117.48c loss)
- Trading losses in its Pick 'n Pay business increased by 9.1% to R718.9 million, attributed to margin contraction in the gross profit for H1 FY25.
However, the company noted positive growth in its Clothing and Online divisions and improvements in company-owned supermarkets. The partnership with Mr. D and Takealot could be instrumental in catching up in the online retail space, an area that has become increasingly important for retailers worldwide.
To strengthen its financial position, Pick 'n Pay held an oversubscribed rights issue in mid-2024 to raise R4 billion. Although this caused an initial share price dip on 17th July 2024, it allowed the company to progress plans to separately list Boxer. Technically, the stock has been in a downward trend since 2016, but recent indicators, including a 200-day moving average break on 27th May 2024 at 2558c, suggest a possible new upward trend. As of the end of October 2024, shares were trading around 2640c, reflecting cautious optimism. Despite these developments, the share remains risky, given the continued competitive pressures and challenging market conditions.
In its latest results for the 26 weeks ending 25th August 2024, Pick 'n Pay reported:
- Turnover up 3.7%
- Headline loss of 136.6c per share (versus a previous 117.48c loss)
- Trading losses in its Pick 'n Pay business increased by 9.1% to R718.9 million, attributed to margin contraction in the gross profit for H1 FY25.
However, the company noted positive growth in its Clothing and Online divisions and improvements in company-owned supermarkets. The partnership with Mr. D and Takealot could be instrumental in catching up in the online retail space, an area that has become increasingly important for retailers worldwide.
To strengthen its financial position, Pick 'n Pay held an oversubscribed rights issue in mid-2024 to raise R4 billion. Although this caused an initial share price dip on 17th July 2024, it allowed the company to progress plans to separately list Boxer. Technically, the stock has been in a downward trend since 2016, but recent indicators, including a 200-day moving average break on 27th May 2024 at 2558c, suggest a possible new upward trend. As of the end of October 2024, shares were trading around 2640c, reflecting cautious optimism. Despite these developments, the share remains risky, given the continued competitive pressures and challenging market conditions.
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