Investment Experts Warn South Africans to Stay Away from Pick n Pay

As Pick n Pay fights to regain market share and financial stability, prominent investment professionals are advising South Africans to steer clear of the struggling retailer — at least for now.

Once a household name and market leader, Pick n Pay has seen its dominance eroded by competitors like Shoprite Checkers and Woolworths Food, leading to a decade-long decline in performance, market share, and profitability.

So serious were the retailer’s troubles that it became technically insolvent, prompting an emergency two-phase recapitalisation plan in 2024. This move raised R12.5 billion and helped repay long-term debt, while also selling a portion of its thriving Boxer business.

A Trillion-Rand Gamble on Revival

Under new CEO Sean Summers, Pick n Pay is now trying to reboot its operations and brand image. Part of its turnaround strategy includes refurbishing old stores, launching modern retail formats, and expanding its FNB eBucks partnership to attract and retain customers.

“We still have such great real estate around the country, and they need to be revitalised and renewed,” Summers said.

Recent feedback from newly refurbished stores has been promising, with some locations doubling their sales and receiving positive reviews. Pick n Pay is also betting on convenience, broader product ranges, and better customer service as key pillars of its recovery.

Why Investment Analysts Remain Skeptical

Despite signs of internal progress, investment experts remain cautious.

Jean Pierre Verster, founder of Protea Capital Management, told Business Day TV that he is staying away from Pick n Pay shares, citing deep strategic challenges and the capital-intensive nature of the turnaround.

“Strategically, they are in a difficult situation, and they must spend a lot of capex,” Verster explained.

He also questioned the sustainability of Pick n Pay’s Hypermarket model, while noting that delivery is the real growth area in groceries—and one where Checkers Sixty60 has a commanding lead.

Verster said the only part of the group he finds investable is Boxer, which is now separately listed on the JSE.

“Therefore, I am not interested in buying Pick n Pay,” he added.

Uncertainty About Strategy Execution

Grant Nader, senior portfolio manager at Benguela Global Fund Managers, also sees red flags. He believes Pick n Pay’s current strategy lacks clarity and has yet to deliver visible success.

“Their store refurbishment is an expensive exercise, and they have a long way to go before it is obvious that they are turning the ship around,” Nader said.

Until the company shows clear top-line growth and improved cash flow, he argues that there’s no rush for investors to buy into Pick n Pay’s turnaround story.

High Risk, Unclear Reward

While Sean Summers and his team continue to push forward with bold plans, expert consensus suggests it’s too early to treat Pick n Pay as a reliable investment opportunity.

For now, many investors will be watching from the sidelines—waiting to see whether this retail icon can truly reinvent itself in South Africa’s ultra-competitive grocery market.

{Source: BusinessTech}

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