Buy: Pick n Pay
Pick n Pay’s turnaround strategy is refreshingly simple. Management has invested in select staff and replaced others, including a significant number of store managers. Higher trading expenses reflect capability investment rather than waste, with scope to streamline once execution beds in. Fresh food is a priority (over Asap! delivery) after share losses to Woolworths. Targeted revamps aim to improve quality, availability and price perception. Franchisee relations have improved, with like-for-like sales up 1.7% in the first half of financial 2026. Management targets trading profit breakeven by financial 2028. A net cash position of R3.2bn, combined with dividends from its 65.6% Boxer stake, should fund revamps and investment over the next two years. Succession is under way, likely internal, given 2½ years left on Sean Summers’s contract, which suggests continuity in strategy. On valuation, adjusting for Boxer’s market value implies a negative value for Pick n Pay. If performance continues, that gap should narrow.
Sell: Gold
The fundamental story for gold has seldom been better. The bullion price stretched briefly to a record high of $4,381 on October 20 before retreating sharply. But it is probably time to take some profit. As the world collectively lost faith in the US long-term balance sheet, it took refuge in gold. As a result, the price has risen dramatically and it is above its record (inflation-adjusted) high of $3,800. What people sometimes forget is that historically, gold is as volatile as stock markets, and it can decline just as quickly. Inflation globally looks to be under control, and the argument of it being an inflation hedge looks less compelling. Central banks are increasing their proportion of reserves of gold, which provides a strong underpin, but this is just one of the factors. At these levels, jewellery demand is likely to come under pressure. Historically, prices decline from record highs, so while we would not be selling out, some profit-taking seems prudent.
Armitage is CEO of Anchor Capital
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