The Cape Town-based group’s voluntary severance programme (VSP) offers staff 1.5 weeks of pay per completed year of service, plus four weeks of notice pay.
According to the group, its objective is to reduce employee costs.
The group said the cost of the compensation payments to departing employees will be borne in the first half of the current financial year.
Pick n Pay said it expects the programme to be cost neutral for the full financial year, as compensation packages will be fully recouped through cost savings.
“In subsequent years, the reduction in employee numbers will have a positive impact on the operating costs of the group. Alongside other strategic actions designed to improve the Group’s performance, the VSP is a major step forward in making the business more competitive and more sustainable,” the update read.
The group is projecting that its headline earnings per share for the 26 weeks to end August 2020 will be down by more than 50% as it grapples with the effects of Covid-19 on their business.
This excludes the impact from hyperinflation accounting in Zimbabwe.
“I want shareholders to understand and be reassured that the impact on our first-half earnings that we are announcing today derives solely from the specific circumstances of the pandemic, the impact of measures taken by government and ourselves to mitigate it, and the once-off costs of our VSP which has made the Group leaner and more competitive,”said Richard Brasher, CEO of Pick n Pay, in the statement.