Pick n Pay, controlled by Soutgh Africa's billionaire Ackerman family, sells down its Boxer crown jewel to fund a slow turnaround

Pick n Pay has sold down more of its fast-growing Boxer chain to raise cash for a turnaround that is proving slower and costlier than the South African grocer expected, and that has cost its founding Ackerman family control of the business it built over nearly six decades.

The retailer placed an 11.5 percent stake in Boxer with investors in May, selling about 57.3 million shares at R82 each to raise roughly $290 million (R4.7 billion). The sale cut Pick n Pay's holding in the discount chain to about 53 percent from more than 65 percent, leaving it in control but leaning harder on the one part of the group that is thriving.

Boxer has been the engine of the business for years. The discount format, aimed at lower-income and rural shoppers, grew turnover by more than 12 percent in the year to March and added 51 net new stores to reach 576 outlets. Pick n Pay's own supermarkets, by contrast, saw turnover slip 1.6 percent as the group closed or converted loss-making stores.

The proceeds go toward a recovery plan that chief executive Sean Summers has run since returning to the company in 2023. Summers says three of the plan's six priorities are largely done, including recapitalising the business, rebuilding management and resetting the store base, and that the core supermarkets are on a path back to breaking even on cash.

Progress has been uneven. Group turnover rose 3.4 percent in the last financial year and like-for-like sales at Pick n Pay supermarkets grew 3.9 percent, while online sales jumped almost 33 percent. Group trading profit still fell 4.2 percent, and the company continues to post a headline loss, though a narrower one than it had feared earlier in the year.

The rebuild has also hit workers. In early May, Pick n Pay opened a formal retrenchment consultation affecting store-based staff outside management, part of an effort to trim costs as it reshapes its store estate.

Some analysts read the latest Boxer sale as a warning sign. They argue that tapping the group's most valuable asset again suggests the core supermarket business is harder to fix than management first thought, and note that Pick n Pay has already pushed back its guidance on when the stores will break even.

The crisis that forced all of this came to a head in the year that ended in February 2024. Pick n Pay reported a net loss of about $198 million (R3.2 billion), a swing from a profit the year before, and disclosed that it was technically insolvent, with liabilities exceeding assets by roughly $11 million (R183 million). It had breached its debt covenants.

The response was a two-step rescue. Pick n Pay raised about $247 million (R4 billion) through a rights offer and then listed Boxer separately on the Johannesburg Stock Exchange in late 2024, selling roughly a third of it for about $525 million (R8.5 billion). Together the moves brought in around $770 million (R12.5 billion) and returned the group to a net cash position.

The turnaround also ended the Ackerman family's grip on the company. Raymond Ackerman, who bought a small Cape Town grocery business in 1966 and built it into South Africa's leading grocer, ran Pick n Pay for decades and made it the foundation of the family fortune. His son Gareth chaired the board for years, but the family gave up the chairmanship and saw its stake diluted as fresh capital came in.

Raymond Ackerman, who died in 2023, had made Pick n Pay a household name by taking on apartheid-era price controls and powerful suppliers to discount staples such as bread, milk and fuel. He introduced the hypermarket to South Africa in 1975, reshaping how the country shopped.

The company's slide is starkest against its old rival. Shoprite, once neck and neck with Pick n Pay on revenue in 2007, now turns over about $15.6 billion (R253 billion), more than double Pick n Pay's roughly $7.4 billion (R120 billion). Shoprite is South Africa's most valuable retailer, worth about $10.7 billion (R172.8 billion) on the market, while Pick n Pay's long decline erased billions of rand in shareholder value at its lowest point.

Summers has struck a confident tone even so. He says the product range has improved, store standards have risen and a new logistics arrangement should cut costs in the years ahead, and that with the store reset finished the group can return to opening outlets, favouring smaller formats to keep rents down.

The question now is whether the core Pick n Pay brand can stand on its own without repeated sales of Boxer to prop it up. Management insists there is a clear path to break-even. Until the supermarkets stop bleeding cash, though, the group's fortunes rest heavily on the discount chain it keeps selling pieces of.