South African retail giant Pick n Pay Group Limited has written down its investment in TM Supermarkets (Pvt) Limited to zero, citing ongoing losses, reported <a href="https://www.theindependent.co.zw/business-digest/article/200034372/pick-n-pay-writes-off-tm-investment">The Zimbabwe Independent</a>.
Pick n Pay holds a 49% stake in TM through a partnership with Zimbabwean conglomerate Meikles Limited.
The decision is attributed to Zimbabwe’s challenging economic environment, characterised by hyperinflation, volatile currency rates, and increasing economic instability.
Formal retail operations in Zimbabwe are being threatened by declining disposable incomes which are forcing consumers to turn to cheaper options in the informal sector or smuggled goods.
In its half-year report for the period ending August 25, 2024, Pick n Pay reported a 6.9% year-on-year drop in sales across its African markets outside South Africa, totalling R1.9 billion (US$107.1 million).
While operations in Zambia have continued to perform well despite local disruptions, the deteriorating conditions in Zimbabwe led to the impairment of the TM investment to zero in early 2024. Pick n Pay’s half-year report reads in part:
<blockquote>
The group’s operations in Zambia delivered another strong trade performance, notwithstanding severe operational disruption from power outages in the region and the impact of local currency devaluation.
As a consequence of the deteriorating economic conditions in Zimbabwe, the group impaired its investment in its associate TM Supermarkets to a book value of zero in February 2024 and no further losses have been recognised.
The group is actively working to optimise its footprint outside of South Africa, including exiting Nigeria, restructuring the Botswana franchise into a company-owned model, and pursuing new growth opportunities in Namibia, following the termination of the existing master franchise agreement in that country.
</blockquote>
Pick n Pay also operates in eSwatini and Lesotho. In Zimbabwe, Pick n Pay and TM jointly operate 74 outlets across the country.
In light of TM’s ongoing losses, Pick n Pay has expressed limited optimism for future returns, indicating that dividends are unlikely and any potential profits would be minimal.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

Pindula News

Pick n Pay, a big store from South Africa, lost all the money they put into TM Supermarkets in Zimbabwe. They blame the bad economy in Zimbabwe for the loss. People there don't have much money, so they can't shop at big stores like TM. Pick n Pay also had less sales in other African countries. They say they won't make money in Zimbabwe anytime soon. They are looking at other countries to make money instead. It's not looking good for Pick n Pay in Zimbabwe.

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