Pick 'n Pay rides out the extortion storm
Blackmail
By Marcia Klein
Worse companies than Pick 'n Pay have received better treatment.
At least that is what one analyst says of the retailer at the centre of an extortion threat recently.
The analyst says Pick 'n Pay is probably one of the few companies able adequately to handle a crisis of this nature.
As proof, the retailer's share price was at R14.50 on Friday, up 7% since it announced the threat on June 30 and named three products suspected of containing cyanide.
This increase compares favourably with Woolworths, whose share price has risen 6% over the same period and Shoprite, which is up 2.3%.
It has now been over two months since the extortionist first approached the group, and some three weeks since it made its problem public.
Pick 'n Pay has, apart from the cost of informing its customers, also had to heighten security and take a number of items off the shelves and destroy them.
The analyst says it is not easy at this stage to quantify the extent of the problem. But it is clear that if the problem continues, the group may suffer.
A number of retailers, including Massmart, Edcon and Truworths, have recently given trading updates pointing to buoyant sales. Although not strictly comparable, Pick 'n Pay is clearly not operating in a poor retail environment and this could help it keep its turnover levels up.
This is crucial for grocery retailers who trade on very thin margins.
A spokesman for Pick 'n Pay says there has been no new developments in the extortion matter in the past few days.
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