Pick n Pay is in financial trouble and plans to close unprofitable stores and convert Qualisave stores back to Pick n Pay stores as part of its turnaround strategy.
Pick n Pay is in serious financial trouble. As part of a turnaround strategy, it will close loss-making stores and convert Qualisave stores back to Pick n Pay stores.
The main reason for Pick n Pay’s technical insolvency is its interest-bearing debt, which rose by R5.7 billion from a year ago. Pick n Pay has also breached its second debt covenant, which requires its EBITDA to be at least 3.5 times greater than its net interest expense. It is only 3.2 times greater.
They have identified many stores in critical condition due to factors like demographic changes or a problem with the shopping centre. However, he said they will still concert certain Pick n Pay stores to franchises where franchisees can deliver higher sustainable profits and growth. The Pick n Pay QualiSave stores were revamped to make them easily distinguishable from Pick n Pay stores.
The four-year plan was to deliver turnover growth at a compound annual rate of 10% and increase the profit before tax margin to above 3.0% by 2026.
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