South African retail giant Pick n Pay Group Limited has made the significant decision to write down its 49% stake in TM Supermarkets (Pvt) Limited to zero. This move comes as a result of the persistent losses incurred by TM Supermarkets, largely due to Zimbabwe's challenging economic environment.

The economic conditions in Zimbabwe have been characterized by hyperinflation, volatile currency rates, and economic instability. These factors have led to declining disposable incomes, forcing consumers to turn to cheaper options in the informal sector or smuggled goods. Consequently, formal retail operations in Zimbabwe, including TM Supermarkets, have been severely impacted.

According to Pick n Pay's half-year report for the period ending August 25, 2024, the group's operations in Zambia delivered a strong performance despite local disruptions. However, the deteriorating conditions in Zimbabwe led to the impairment of the TM investment to zero in February 2024. The report stated, "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."

Pick n Pay's African operations outside of South Africa reported a 6.9% year-on-year drop in sales, totaling R1.9 billion (US$107.1 million). The group is actively working to optimize its footprint outside of South Africa, including exiting Nigeria, restructuring the Botswana franchise, and pursuing new growth opportunities in Namibia.

In Zimbabwe, Pick n Pay and TM jointly operate 74 outlets across the country. Despite this, the write-down reflects the retailer's diminished expectations for TM's financial performance. With ongoing losses and limited optimism for future returns, Pick n Pay has expressed that dividends are unlikely and any potential profits would be minimal.