Pick 'n Pay's Australian business under review
May 23, 2006
By Godfrey Mutizwa
Johannesburg - Pick 'n Pay Stores, South Africa's largest grocery chain, may decide the future of its unprofitable Franklins stores in Australia this fiscal year, chairman Raymond Ackerman said.
"We will consider what we will do if don't get near to, or break even this year," Ackerman said on Tuesday in a telephone interview from the company's headquarters in Cape Town.
"A lot will depend on franchising."
Australian grocer Franklins has has not made a profit since Pick 'n Pay bought the supermarket chain for R557 million in 2002. The company lost R92.7 million in the 12 months through February. The loss will shrink "significantly" this fiscal year after the unit established its distribution network, Pick 'n Pay said on April 2.
Pick 'n Pay, founded by Ackerman in 1967, has opened three Franklins franchise stores so far and plans to open between 20 and 30 more in the next two years, the chairman said. There are currently 75 Franklin stores that are owned and operated by Pick 'n Pay.
"We have just launched franchising as the next big move forward for us to get extra turnover," Ackerman said.
Unlike some South African companies, Pick 'n Pay does not plan to sell any of its business to outside black investors, he said. Any sale will be to the company's staff.
Companies ranging from banks to miners have sold stakes to black investors as part of a government plan to increase the participation of the country's 80 percent black majority in the economy.
"We don't believe in selling to outside people," Ackerman said.
"We're busy on a share scheme for our own people. We are also doing a lot of work with smaller outside suppliers in skills training." - Bloomberg
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