Pick n Pay Closes 32 Supermarkets in South Africa as OK Zimbabwe faces similar fate
Recently, OK Zimbabwe shut down five branches across the country owing to a range of problems, similarly, one of South Africa’s leading retailers, Pick n Pay, has announced the closure of 32 supermarkets across South Africa as part of its turnaround strategy. This move comes amid efforts to stabilise the business following significant financial losses in recent years.
In a trading update for the 45 weeks ending 5 January 2025, Pick n Pay revealed that 24 company-owned stores and eight franchise stores have shut their doors. In addition, five company-owned stores were converted into franchise outlets.
At the time of last reporting (October 2024), the group had closed 24 supermarkets, including 10 corporate stores and 14 franchise stores — meaning the total has increased by 8 since.
This decision is reported to be part of the retailer’s ‘Store Estate Reset’ plan aimed at optimising operations and focusing on profitable locations.
Also Read: OK, Pick n Pay face closure over ‘unsustainable’ exchange rate policy
The company embarked on this turnaround journey after reporting a staggering after-tax loss of R3.2bn for the fiscal year ending February 2024. This included a R2.8bn non-cash impairment on company-owned assets. Pick n Pay Grocery alone recorded a trading loss of R1.5bn, which significantly offset the R1.9bn profit from its Boxer stores.
To regain financial stability, Pick n Pay raised R4bn through a Rights Offer in August 2024, which was more than double oversubscribed.
Additionally, the separate listing of Boxer stores generated another R8bn, strengthening the company’s financial foundation. Boxer reportedly saw strong sales growth in the 45-week period, with sales up 11.4% and 6.7% on a like-for-like basis.
OK closures in Zimbabwe
OK has faced difficulties restocking, with many outlets experiencing empty shelves, particularly in food products. Suppliers are reportedly unwilling to provide goods on credit or in local currency.
The company is also struggling with US$17 million and ZiG537 million in outstanding payments to suppliers, some of whom have withheld supplies despite part payments.
In an internal memo, OK announced plans to cut its workforce, closing five outlets—Robson Manyika, Glen Norah, Kuwadzana Express, Mbare (all in Harare), and Chitungwiza Town Centre, as well as Entumbane in Bulawayo. A sixth branch is scheduled to close in March.
The closures will result in job losses, primarily targeting low-level workers, with severance pay set at one month’s salary for every year worked, along with three months’ notice pay and payment for unused leave.
The branches being closed are among those making losses or operating from rented spaces. OK operates 72 branches across Zimbabwe.
A company executive, who wished to remain anonymous, told Business Weekly that OK’s troubles are due to currency and economic issues in the US dollar-dominated economy.
The retailer’s situation worsened after receiving goods on credit in US dollars, which they now struggle to pay off due to cash flow issues.
Despite the introduction of the Zimbabwe Gold (ZiG) in April 2024, which stabilized the local currency, it hasn’t improved OK’s fortunes.
The retailer also faces intense competition from the informal sector, where suppliers prefer cash transactions in US dollars, allowing informal traders to offer lower prices due to fewer regulatory burdens and tax obligations.
