"The outlook on the national long-term rating is stable‚" Fitch said.
The affirmation and stable outlook also factor in Fitch's expectation that the steps taken by the company's management under its transformation strategy‚ like the focus on reducing costs‚ better working capital management and supply chain focus‚ are sustainable.
The grocer is trying to get its house in order after facing a barrage of criticism from market spectators for its lacklustre performance over the last few years.
Pick n Pay has made sizable investments in its loyalty programme‚ centralised distribution system and a specialist category buying function to improve operating efficiencies.
At its annual general meeting in June‚ chairman Gareth Ackerman said the company was on the road to recovery.
"After several years of extremely difficult trading conditions‚ often traumatic restructuring and very considerable capital expenditure‚ Pick n Pay is showing signs of the green shoots coming through‚" he said.
According to Fitch‚ successful implementation of the Cape Town based retailer's transformation strategy should increase its competitiveness and provide operating cash flow relief and earnings before interest‚ taxes‚ depreciation‚ and amortisation (ebitda) margin protection from the 2013 financial year.
"...the transformation strategy underway will start realising monetary rewards by 2014‚ translating into a gradual improvement in operating margins to a level commensurate with the current rating‚" Fitch said.
However‚ the ratings agency said it recognised that the group had been slow to identify and adapt to changes in the market and‚ as such‚ its competitive position had weakened.
The agency said it remained cautious that consumer disposable income would be under pressure in the near term and that the increasingly competitive environment was likely to result in anaemic organic sales growth in the 2013 financial year.
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