Rehired Pick n Pay CEO May Take Two Years to Turn Around Grocer
Pick n Pay Stores Ltd. shares plunged after the rehired chief executive officer of South Africa’s third-largest grocer by revenue said it may take two years to turn the struggling company around. Pick n Pay Stores Ltd. shares plunged 13.3% after the rehired chief executive officer of South Africa’s third-largest grocer by revenue said it may take two years to turn the struggling company around. The shares are down 33% in the past three months, making them the worst performer on the benchmark FTSE/JSE Africa All Share Index. The retailer has been trying to grow its business by targeting the lower-income market, but revenue for its core Pick n Pay South Africa segment increased only 0.3%. The company reported a 571.3 million rand ($31 million) loss after tax in the six months through August. Management will place more focus on returning the core Pickn Pay supermarkets business to growth and profitability, even as it continues to focus on sales to the most cash-strapped South Africans.
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(Bloomberg) -- Pick n Pay Stores Ltd. shares plunged after the rehired chief executive officer of South Africa’s third-largest grocer by revenue said it may take two years to turn the struggling company around.
The shares slumped 13.3% by 10:36 a.m. in Johannesburg and are down 33% in the past three months, making them the worst performer on the benchmark FTSE/JSE Africa All Share Index.
The Cape Town-based company abruptly replaced its CEO last month, bringing back former leader Sean Summers, after warning it would post its first interim loss since at least 2001.
The retailer has been trying to grow its business by targeting the lower-income market. While sales at its Boxer outlets rose 16% in the first half, revenue for its core Pick n Pay South Africa segment, which accounts for two-thirds of the group’s sales, increased only 0.3%. No interim dividend was declared.
“It will take time to do this properly and sustainably,” Summers said in a post-earning presentation on Wednesday, as the company reported a 571.3 million rand ($31 million) loss after tax in the six months through August.
Management will place more focus on returning the core Pick n Pay supermarkets business to growth and profitability, Summers said, even as it continues to focus on sales to the most cash-strapped South Africans.
“We need to get focused back on trading again, buying and selling, as opposed to trying to drive all sorts of other things like rebates,” Summers said. “The flat truth is that Pick n Pay has fallen out of love with its customers, its people, its suppliers. This is what lies ahead of us — and this is why it’s so exciting because from here we go up.”
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