Pick n Pay cuts 3 500 jobs, warns on H1

Cost of the retrenchments will weigh on profits, retailer says.
Picture: Moneyweb

 JOHANNESBURG – Pick n Pay has cut 10% of its staff, eliminating approximately 3 500 jobs, the South African grocer said on Monday, as the country grapples with its first recession in eight years.

Most of South Africa’s retailers have flagged lower or stagnant profits as consumer confidence and business sentiment plumb multi-year lows amid political turmoil.

Read: SA’s retail nightmare

Pick n Pay, which employs around 35 000 people, said the cost of the retrenchments will weigh on its profits in the six months to end-August. 

“The voluntary severance programme is one of several steps we have taken to make our business more competitive in what is a tough trading environment. For reasons of timing, it will have a material impact on our result,” chief executive Richard Brasher said.

Pick n Pay expects its headline earnings per share for the half-year to fall by more than 20%, the company said.

But payroll savings from the second half of the year will neutralise the effect of the retrenchment costs on its full-year results, Pick n Pay said.

“In subsequent years, the reduction in employee numbers will have a significant positive impact on the operating costs of the group, creating additional headroom to reduce prices and improve value for customers,” it said.

Pick n Pay, founded 50 years ago, also has operations in Botswana, Mozambique, Zambia, Zimbabwe, Lesotho, and Namibia.

Jobs were cut at head office, in the company’s regional structure, store operations and in its supply chain, it said

“These roles and functions were no longer required due to improvements in organisation, planning and technology,” Pick n Pay said.

The company has invested heavily in new distribution centres since 2010 to compete with rivals Shoprite and Woolworths, who have both grown rapidly over the past decade.

Shares in Pick n Pay were up 2.9% at R63.38  by 0921 GMT, compared with a 0.7% rise in the JSE’s All-share index. 

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Eish…I am not surprised as well.

I stopped shopping many moons ago due to Pick and Pays very hostile and unfriendly staff….

Just been to Checkers in Hout Bay, staff are completely useless, standing around chatting or looking at their phones, while I search for items I need which are mostly out of stock.

I do not have high hopes for big 4, and hopefully disrupted by an Aldi, or even better Choppies.. no service cannot be worse than Shoprite/Checkers.

Wow I wonder how many retailers might follow suit. These are tough times we are living in, but we will survive.

This is the problem in SA! When things get a little tough, we get rid of people, more unemployed, fewer people to consume above the minimum ie luxury items etc! less taxes, etc.
SA is in a self inflicted death spiral!!!
However, CEO’s still earn tens of millions!!!

Welcome to NO HOPE COUNTRY!!!!!!!!!!!!!

@ Woogoodly – while I agree with some of what you have written (e.g CEO’s are overpaid) I assume by your emotional tone that you have a particular agenda for scare mongering about South Africa. Retrenching staff in a recession is certainly not a South Africa specific event – it happens worldwide and is a common characteristic of the capitalist system. By your concluding statement I assume you have not been following recent politics including the release of the Gupta emails and the consequences thereof.

Howzit JustinB – nothing emotional about my post, just stating facts!!!
We assume that we have a capitalistic system, however, we all know that our economy and the people of SA are held to ransom by these so called capitalist companies, over and over again collusion between companies has been uncovered!!! If companies have to collude to fix the price of BREAD – a basic foodstuff – then you are certainly in NO HOPE COUNTRY!!!
Nothing will come of the Gupta emails saga!! Trust me!!!

Typical cowardly,lazy and malicious reaction from corporates in South Africa due to their nature of colluding to be anticompetitive.
The Anticompetition Commission needs the investigate every single
one of them.Every single mall has a Pnp,Spar or Checkers,MrP,Makro,Builders Warehouse..ETC..
force feeding their fixed prices onto the consumer.
The CEO in south africa are just fat cats acting in their own interests and now its coming home to bite.
Specials are not truely specials as they all have the same.

The staff at PnP are utterly useless.

In Europe lot of the supermarkets are going for the self service checkouts, reducing the number of employees. Also, in lot of cases people are doing several jobs. If you visit a Lidl, Aldi or similar supermarket, the same person who stocks the shelves works as a cashier or even cleans the floor if required.

End of comments.

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