Pick n Pay’s return to profitability depends on cutting employees’ pay, among other factors
· Citizen
Pick n Pay Group says its turnaround strategy partly depends on successfully completing the restructuring of staff salary packages and working conditions.
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This is as the retailer revealed in a trading update on Thursday that its turnaround is gaining traction, with improving underlying like-for-like sales and strong online growth. However, total sales remain weighed down by store closures and conversions as the retailer restructures its supermarket estate.
The retailer has, for a number of years, implemented different turnaround strategies in a bid to return Pick n Pay to its former glory. Recently, the retailer listed Boxer on the Johannesburg Stock Exchange (JSE) and benefited from Boxer’s IPO to pay off its debt.
Pick n Pay continues to make money from Boxer primarily by holding a 53.1% majority share in the discount chain, which entitles it to a proportionate share of Boxer’s net income via dividends.
Pick n Pay’s new turnaround strategy
While Pick n Pay made some money from listing Boxer, the move did not completely take the former out of the woods. Now the retailer has embarked on a new turnaround strategy, which includes reducing employees’ salaries and other benefits.
“The Pick n Pay segment requires the achievement of the full range of its turnaround initiatives, including the successful conclusion of the S189A process, in order to meet the previously announced break-even profit objective within the targeted timeframe,” said the retailer.
A S189 consultation process begins when the employer issues a written notice inviting the affected employees (or their union representatives) to consult. The notice must disclose the reasons for the proposed retrenchment, alternatives to dismissal, and the number of employees affected, among others.
However, the retailer has numerous times reiterated that the process is not to reduce headcount, but to restructure employment contracts. The South African Commercial, Catering and Allied Workers Union (Saccawu) does not believe that is the case.
Pick n Pay’s plan with employees
The union representing workers has since approached the Labour Court and referred a dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA). This is as Saccawu believes the retailer must cut executives’ pay packages, instead of “sacrificing employees”.
While the parties are awaiting outcomes from the Labour Court and the CCMA, the retailer said it remains “fully committed to engaging in good faith and in accordance with all applicable legal requirements”.
Pick n Pay added that “the proposed changes to terms and conditions (as alternatives to retrenchment) form part of the Group’s ongoing turnaround strategy and are aimed at ensuring that store-based labour practices, organisational structures and terms and conditions of employment remain sustainable, competitive and aligned with the requirements of the retail market.”
Group’s performance
Pick n Pay told shareholders that for the 20 weeks ended 19 July 2026, the group’s like-for-like sales grew 2.6%, with turnover flat year-on-year.
The retailer in SA saw like-for-like sales grow 1.9%, with a 0.4% decline in turnover resulting from the recent completion of the planned closure or conversion of underperforming company-owned supermarkets.
Discount retailer Boxer remains the group’s pride and joy. During the period, the retailer’s turnover grew 7.2%, and 2.2% on a like-for-like basis.
“The Group is pleased that Boxer continues to gain market share,” said the group.
Online turnover growth for the period was 37.5%, driven by continued growth of Pick n Pay asap! and Pick n Pay groceries on the Mr D app.
Clothing turnover growth in standalone stores for the period was 3.3%. Clothing like-for-like sales in the period showed “improved momentum relative to the disappointing -5.6% like-for-like reported for second half of 2026”.