NIGERIA - South Africa’s supermarket chain Pick n Pay has announced its departure from Nigeria by divesting its 51% stake in a joint venture with Nigerian company A.G. Leventis. 

This move is part of a restructuring strategy targeting the company’s operations outside South Africa. CEO Sean Summers revealed the decision as the company grapples with increased losses, higher borrowing costs, and significant operational challenges. 

Industry experts are now speculating whether Pick n Pay will also leave the challenging Zimbabwean market.

The Nigerian exit is no surprise to analysts. Pick n Pay entered Nigeria in 2021 with two stores in Lagos, after initial plans to expand in West Africa met delays. 

However, economic turbulence, currency devaluation, and foreign exchange shortages have challenged Nigeria’s retail sector, pushing several multinational retailers, including South African counterparts Shoprite and Mr Price, to withdraw in recent years. 

“The Nigerian market posed difficulties that made sustainable operations nearly impossible for Pick n Pay,” said CEO Summers.

Pick n Pay’s financial strain is evident. For the first half of its fiscal year ending August 25, the company reported a loss before tax and capital items of R1.1 billion (US$62 million), up from R837.2 million in the same period last year. 

Trading losses in the core Pick n Pay division rose 9.1%, attributed primarily to tighter margins and increased operating costs. Like-for-like sales growth was nearly stagnant, at 0.5%.

To counteract these losses, Pick n Pay has launched an extensive restructuring plan. This includes closing around 100 underperforming stores and converting 70 stores to the successful Boxer discount model, or into franchises. 

Boxer, a bright spot in Pick n Pay’s portfolio, showed a 16% increase in trading profits and a 12% rise in sales. This success has prompted plans for an R8 billion (US$452 million) IPO of Boxer by the end of 2024.

Pick n Pay’s future in Zimbabwe under scrutiny

While the company is cutting its footprint in West Africa, its 57-store joint venture in Zimbabwe with Meikles could be next. 

Zimbabwe’s retail environment has been challenging, with formal retailers struggling against hyperinflation, an unstable currency, and complex regulations. 

Analysts suggest that Pick n Pay may consider scaling back its Zimbabwean operations within the next year, following the lead of other South African retailers that have left the market, such as Shoprite in 2013.

The company’s announcement follows the termination of a longstanding franchise agreement with Ohlthaver & List Group in Namibia, scheduled for June 2025. 

Since entering Namibia in 1997, Pick n Pay has operated 19 stores there, but the ending of this partnership reflects a shift towards consolidating operations around more stable markets.