Retail major Pick n Pay has confirmed that no member of the founding Ackerman family will sit on the board of its cash cow, Boxer, after it unbundles from the group in the next few months.
This is as the family retreats from the control it has exercised over the group for nearly six decades. Earlier in 2024, Pick n Pay made a decision to spin off Boxer as part of its recapitalisation plan to keep the company afloat.
In its annual report published on Wednesday, the group said the Ackerman family’s investment vehicle, Ackerman Investment Holdings (AIH), would not have representation on the Boxer board.
“In the context of the proposed Boxer IPO, the Group confirms that there will be no AIH representation on the Boxer board and that there will be no controlling voting structures for Boxer,” Pick n Pay said.
The proceeds of the Boxer’s mooted unbundling is expected to go a long way towards paying off Pick n Pay’s R6.3bn debt pile.
The Ackerman family took many by surprise in May when it relinquished control of Pick n Pay. To give effect to this, the group’s chair, Gareth Ackerman, will step down in 2025 after serving 14 years in the role. In all, Ackerman has been on the board for four decades.
AIH also ceased nominating the positions of chair, CEO and CFO, while the family’s representation on the Pick n Pay board will be reduced from five to three.
The changes were made after the group reported a R1.5bn trading loss for Pick n Pay and a R1.9bn trading profit for Boxer. The trading loss reported by the Pick n Pay business triggered a R2.8bn non-cash impairment on the assets of Pick n Pay company-owned stores.
In the annual report, the group said it would prioritise liquidity and debt repayment until the completion of its two-step recapitalisation plan — which includes an R4bn rights issue.
The group said capital investment would be limited to about R2.2bn in the 2025 financial year, significantly lower than the R3.8bn invested in the 2024 financial year. Capital investment would be prioritised in the group’s high-performing Boxer brand, clothing and online businesses to maximise investment returns.
The group also said capital spend in Pick n Pay supermarkets would be limited to the critical spend required to maintain the quality of the estate and improve like-for-like volume growth, and that the cutback in capex was “a trade-off between short-term space growth in Pick n Pay and greater profitability and stability over the longer term.”
The imminent unbundling of Boxer is expected to unlock value for shareholders. Pick n Pay bought Boxer in the early 2000s. The group plans to convert some of its loss-making stores into Boxer and limit the overlap of the Pick n Pay and Boxer brands.
Pick n Pay’s focus will be on middle-income and more affluent customers, while Boxer will continue targeting less affluent segments of the market.
“During our review of loss-making stores, we identified several Pick n Pay locations better served by Boxer. Converting these stores will help avoid further Pick n Pay losses and support the new store pipeline for Boxer,” it said.
SA’s largest commercial property owner, Growthpoint, said on Thursday that it was maintaining good relations with Pick n Pay and discussions over the retailer’s restructuring were ongoing.
Growthpoint said excluding liquor and clothing stores, Pick n Pay now occupied 9.4% of its total retail gross lettable area, making it its fourth-largest tenant by gross rental.
“They will be vacating Alberton Mall and Fourways Crossing and we have received offers for the space at both malls. We expect two Hyper stores, Northgate and Woodmead, to downsize gradually. We have no Boxer stores in our portfolio and are discussing expanding both Boxer and Pick n Pay Clothing,” the property group said.
Pick n Pay has identified about 100 loss-making stores in its portfolio, which it will convert to Boxer and close others.
The retailer said it would not be paying dividends until it completed its recapitalisation plan and returned to profitability.
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