Pick n Pay at the checkout

Critics were silenced when profits began to creep into the business for the first time in 2008 - to much fanfare.

But the division has failed to consolidate those gains, and grew turnover by 1.4% in the past year, a rate lower than that of its peers.

If the growth in the refurbished stores is in the double digits, as the company has suggested, then sales in older stores must be in decline.

Pick n Pay has invested R1,3bn in the Australian operation in total, but it has yet to draw a penny out of the business.

Analysts speculate that responsibility for the inability to turn the company around is being laid at Zelinsky's door - now that former chairman Raymond Ackerman, who hired him, has retired.

Decisions, decisions

Pick n Pay CEO Nick Badminton was uncharacteristically tense (on the subject of Franklins) at the company's recent annual results presentation: "We are doing a strategic review on the business." In October, when the review is complete, decisions will be made. "We need to take the business to its next level. The board will decide whether to go big or to look at other objectives," Badminton said.

The problem with going big is that it will require more cash - and that is something Pick n Pay does not have in abundance.

This leaves the possibility of a sale. Franklins has long been mooted as a potential takeover target. While smaller rivals like IGI, Aldi, Costco and FoodWorks may be interested, a suitor could be Metcash Australia, which once handled distribution on behalf of Franklins.

The group is valued at up to AUS$350m, according to the Australian media, and Pick n Pay acquired it in 2001 for 139m.

Zelinsky does not sound as if he is ready for retirement. He told an Australian newspaper that he remained undecided about what type of retail work he would pursue after leaving Franklins. "I have a lot of exciting ideas and I think there are good opportunities that come with a second career."

Source: Financial Mail