South African retail giant Pick N Pay, which is 48% owned by multimillionaire businessman Raymond Ackerman and his family, has announced that it is retrenching 3,500 of its staff – approximately 10% of its workforce.
The retailer said on Monday that the retrenchment is part of a voluntary severance programme which it launched in April 2017 and that the cost of the retrenchment will weigh heavily on its profits in the six months to end in August.
“The voluntary severance programme is one of the 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. The company expects its headline earnings per share for the half-year to fall by more than 20%. But payroll savings from the second half of the year will neutralize the effect of the retrenchment costs on its full-year results. 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,” Pick n Pay said in a press statement.
Pick N Pay will cut jobs in a number of areas at the company, including its head office, store operations, supply chains, store operations and regional structures.
“These roles and functions were no longer required due to improvements in organisation, planning and technology,” Pick n Pay said its press release.
Pick n Pay stores, which employs around 35,000 people is a supermarket chain with close to 900 stores in South Africa, Zimbabwe and Australia. In South Africa the group faces fierce competition from Shoprite and Woolworths.