Pick n Pay (PIK) – Boxer saved the day

The disclosure of Boxer’s sales in 1H23 confirms our previous view that the division has been a significant contributor to the PIK group’s sales and profit in recent years. We estimate that Boxer sales may have grown from R9.1bn in FY12 (when it accounted for 17.1% of PIK SA sales) to R26.1bn in FY22 (27.6% sales contribution).
We unpack the performance of the Pick n Pay (PnP) chains and estimate that PnP Corporate Supermarkets’ sales may have seen a 4.3% CAGR over the past nine years. Accounting for space growth as well as inflation averaging 3.7% p.a. over this period, we believe that PnP Corporate Supermarkets’ same-store volumes may have been contracting, despite the turnaround efforts of the previous management team. The OPM of PnP Corporate Supermarkets may be low at about 1.1%, by our estimates.
We explain why PnP Corporate Supermarkets may be struggling to defend its market positioning and be top-of-mind with the customer. We argue that despite PIK’s pioneering role in supermarkets in South Africa, it now has a small corporate supermarket base, which may limit its ability to compete effectively with its peers.