Pick n Pay to exit Nigerian market amid economic pressures

South African retail giant Pick n Pay has announced plans to exit the Nigerian market, selling its 51% stake in a joint venture with local partner A.G. Leventis. The decision is part of a broader restructuring strategy to streamline operations outside of its South African base, CEO Sean Summers disclosed on Monday, as reported by Reuters.

Pick n Pay entered Nigeria nearly five years ago, establishing two stores, including a flagship outlet in the upscale Victoria Island district of Lagos. The retailer ventured into the market even as other major players were reevaluating their operations due to challenging business conditions.

However, economic difficulties—ranging from high inflation and currency depreciation to the rising costs of operations—have posed significant hurdles to profitability for consumer goods companies in Nigeria.

The federal government has been working to draw foreign investment, yet escalating costs have pressured multinationals to reconsider their positions. In June, fellow South African retailer Shoprite closed its Abuja store following a similar exit from Kano in January, citing an unsustainable business climate.

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Likewise, Jumia recently discontinued its food delivery service, Jumia Food, in Nigeria, underscoring the challenges of achieving sustainable profitability.

Pick n Pay reported a half-year loss before tax of 1.1 billion rand ($62 million), compared to 837.2 million rand the previous year. Losses in its core supermarket operations rose 9.1%, reflecting tighter profit margins and high borrowing costs.

Despite these challenges, the company noted encouraging results in its online and clothing sectors and a 16% profit rise in its discount Boxer division, which is set for a Johannesburg Stock Exchange listing later this year. Pick n Pay aims to raise up to 8 billion rand ($452 million) in what could be the continent’s largest offering of 2024.

CEO Sean Summers expressed confidence in reducing trading losses by as much as 50% by year-end, emphasizing the company’s commitment to revitalizing its core businesses even as it restructures international operations.