South African grocery retailer Pick n Pay is exiting the Nigerian market, selling its 51% share in a joint venture less than five years after entering the market. This strategic move, announced by CEO Sean Summers, is part of a broader restructuring plan aimed at addressing the company’s financial challenges and consolidating its focus on its home market.
Pick n Pay’s foray into Nigeria began in 2020 through a partnership with A.G. Leventis (Nigeria). However, the venture has faced headwinds, contributing to the retailer’s widening half-year losses. In the 26 weeks leading to August 25th, 2024, Pick n Pay reported a pre-tax loss of R1.1 billion, a significant increase from the R837.2 million loss reported the previous year.
“The decision to exit Nigeria allows us to focus our resources and efforts on our core South African market,” Summers stated in an interview with CNBC Africa. “We believe this is the best course of action to ensure the long-term sustainability and profitability of our business.”
This exit strategy aligns with Pick n Pay’s ongoing restructuring efforts, which have been underway since May 2024. In August 2024, as reported by Innovation Village, the company announced plans to close or rebrand approximately 100 underperforming stores in South Africa. This drastic measure reflects the challenges faced by the retailer in a competitive market and its determination to improve its financial performance.
Pick n Pay’s decision to withdraw from Nigeria highlights the difficulties faced by South African retailers expanding into other African markets. Despite the continent’s growth potential, operational challenges, economic volatility, and regulatory complexities can hinder success.
The company’s recent financial performance further underscores the need for strategic restructuring. The wider half-year loss reflects not only the challenges in Nigeria but also trading losses in its core South African supermarket business, coupled with increased borrowing costs.
By exiting Nigeria and streamlining its operations in South Africa, Pick n Pay aims to strengthen its core business and improve profitability. The company’s restructuring strategy includes optimizing its store network, enhancing its online presence, and investing in its Boxer stores, which have shown strong growth.
This renewed focus on its home market is crucial for Pick n Pay’s long-term success. By consolidating its resources and addressing the challenges in its core business, the company aims to regain its competitive edge and deliver value to its customers and shareholders.
