Pick n Pay is technically insolvent and has breached all its debt covenants, which shows the retailer is in serious financial trouble.

It has been reported that eight month’s after the death of founder Raymond Ackerman, his family has been partially sidelined.

As part of this rights issue, the Ackerman family – through a holding company – has agreed to forego majority shareholder voting control of the company, with the ‘exact mechanism still to be finalised’.

This would see their voting rights fall slightly below 50% following the rights offer.

They will also relinquish the right to nominate the chairperson, CEO and CFO immediately, while the representation of the Ackerman family on the board of directors will be reduced to just siblings Gareth, Suzanne and Jonathan Ackerman.

Next year, Gareth Ackerman will retire as chairperson after 14 years in the position.

The firm’s audited results for the year that ended 25 February 2024 reveal that total liabilities exceed total assets by R183m.

It reported a 373% decrease in net profit, dropping from a R1.17bn profit to a R3.2bn net loss. Basic earnings per share declined from 243.37 cents per share in 2023 to a loss of 661.67 cents per share. 

BusinessTech reports that the poor performance took its toll on the retailer’s balance sheet as it had to significantly increase debt to fund operations.

The largest contributor to the increased liabilities was interest-bearing debt which rose by R5.7bn from a year ago.

Even more striking is that Pick n Pay has breached all its debt covenants, pointing to serious problems at the retailer.

Raymond Ackerman bought the first four Pick n Pay stores in Cape Town in 1967 and the company mushroomed and grew to 2 227 stores across SA, Botswana, eSwatini, Lesotho, Namibia, Nigeria, Zambia and Zimbabwe.

Full BusinessTech report