South African retailers are expanding at a potentially unsustainable pace, according to Pick n Pay CEO Sean Summers.

He cautioned that the country’s top five retailers opened more than 700 stores in 2024 and have already added 230 more this year.

Such rapid growth, he warned, could threaten their financial stability in a tough economic climate.

“South Africa is about to equal, or squeak past, the US on the square meter per capita of retail,” Summers said in an interview after unveiling the company’s earnings. “If you’ve got retailers who are prepared to just open stores at any cost, then a shopping center works. But I would question the medium-to-long-term wisdom” of the strategy, he said.

South Africa’s National Treasury has cut its economic growth forecast for the next three years to an average of 1.6%, down from 1.8%.

The revision is partly due to trade disruptions linked to policies introduced by United States President Donald Trump.

“Sales densities in South Africa must be much lower than in the US because obviously per capita spending in South Africa is well below the US,” said Charles Allen, a London-based analyst at Bloomberg Intelligence. “It does make you wonder how people eventually are going to justify the return on the investment.”

Pick n Pay, having completed the first year of its multi-year recovery plan, is focusing on expanding into the lower-income market.

As part of its turnaround strategy, the retailer has shut down several to unprofitable stores, even as rivals like Shoprite Holdings Ltd. continue opening new ones.

While its discount Boxer chain saw a 13% rise in annual sales, revenue from its core Pick n Pay South Africa division—which makes up around two-thirds of total sales—grew by just 1.9%, the company reported on Monday.