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Struggling retailer Pick n Pay has resorted to selling a portion of its stake in top-performing discounter Boxer to fund its multi-year turnaround plan. Pick n Pay said on Tuesday it has successfully sold about 57.3-million Boxer shares, roughly 12.5% of the business, to investors through a fast-tracked private placement, raising R4.7bn. The shares were sold at R82 each, slightly above the recent average price. After the sale, Pick n Pay holds a majority stake of about 53.1%.The company said it intends to use the proceeds to support its turnaround plan and strengthen its financial position. “Pick n Pay intends to deploy the net proceeds from the placement to support the ongoing implementation of its turnaround plan and growth strategy while ensuring maximum financial flexibility over the medium term,” it said.“This will enable the group to continue executing on its strategic priorities, investing ahead of the plan, with a clear pathway to returning the core Pick n Pay Stores segment to cashflow break-even.”Pick n Pay said Boxer remains central to its strategy, describing it as a “vital part of the group”. “Pick n Pay is committed to retaining a controlling stake in Boxer and to participating in its impressive growth trajectory as it continues to be a key engine of value creation for the group and its investors,” the company said.The share sale comes as part of a broader turnaround strategy aimed at stabilising the retailer after a period of declining performance in its core supermarket business.Pick n Pay has cited progress in improving its product offering, store execution and store-estate quality. It said these changes have contributed to improved like-for-like sales growth in company-owned supermarkets and better gross margins.“A new logistics agreement is set to deliver efficiencies over the coming years,” the company said, adding the improvements are expected to support future performance.Over the past years, Pick n Pay has also taken steps to reduce losses and improve operational efficiency. These include closing or converting loss-making stores, investing in pricing competitiveness and improving in-store execution.The retailer’s trading losses in its core business have been reduced, while like-for-like sales returned to growth. The company has also worked to restore its balance sheet through a recapitalisation process.At the same time, Pick n Pay said it is continuing consultations with labour groups as part of efforts to improve store operating costs and efficiency.“Pick n Pay is also engaged in ongoing consultations with our labour partners to improve store operating efficiencies and costs,” it said.While this effort aims to improve costs, unions have rejected it, saying it is a plan to drive workers out.
