Pick N Pay Stores Ltd (PIKJ.J): Another tough year expected – Neutral maintained.

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Pick N Pay Stores Ltd (PIKJ.J): Another tough year expected – Neutral maintained.

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29 Jun 2026 01:00:03 ET │ 22 pages

Pick N Pay Stores Ltd (PIKJ.J)

Another tough year expected – Neutral maintained.

CITI'S TAKE

We reiterate our Neutral rating but lower our Target Price to R22.00,

reflecting a more cautious view on the timing of PIK’s turnaround. We are Neutral

concerned by slowing like-for-like sales, negative operating leverage from a

Price (26 Jun 26 13:19) R20.36high-cost base, and gross margin pressure from rising diesel costs and

competition. These headwinds delay the path to profitability and drive our Target price R22.00↓

FY27e DHEPS estimate down significantly to -20c from a prior 9c. While we from R23.60forecast a sharp recovery in FY28e from cost-saving initiatives, our SOTP

valuation remains heavily dragged by the loss-making Corporate Expected share price return 8.1%

Supermarkets segment. We provide detailed feedback from our interactions Expected dividend yield 0.0%

with mgmt in the note below. Expected total return 8.1%

Market Cap R15,182MTurnaround Timeline Extended Amidst Mounting Pressures — We are extending

the expected turnaround timeline for Pick n Pay, as the path to profitability is longer US$918M

than anticipated. We now see a significant trading profit margin improvement only

in FY28e. Consequently, we are lowering our FY27e DHEPS estimate to -20c from

9c, reflecting near-term challenges. Our FY28e DHEPS estimate is raised to R1.32,

factoring in delayed but impactful employee cost savings. Price Performance

(RIC: PIKJ.J, BB: PIK SJ)Sales Slowdown and Cost Pressures Drive Near-Term Weakness — We see

significant operational headwinds pressuring performance. Gross profit margins are