Former CEO Sean Summers will be returning to the helm of Pick n Pay as the group’s core grocery business struggles, with its present boss having been asked to leave by the board.
The announcement was made as Pick n Pay issued a dire trading statement detailing its headline losses per share of R1.29-R1.49 for the half-year to August 27.
The warnings of worse-than-expected losses sent the share price plunging as much as 16% before closing 14.95% lower, its biggest one-day fall since May 2020 at the height of the Covid-19 lockdowns.
Seventy-year-old Summers, who started on Monday, will soon return from the UK and takes over from Pieter Boone, who joined the retailer two-and-a-half years ago.
Summers was arguably Pick n Pay’s best CEO since founder Raymond Ackerman, and led the group between 1999 and 2007. In 2002, he bought discount retailer Boxer, and when he left Pick n Pay was the grocery market leader.
Some see the retailer bringing back a former and older CEO as a sign of desperation and poor succession planning. But analysts who remember Summers’ successful time as a highly competitive, no-nonsense retailer have welcomed his return.
Syd Vianello, a long-time retail analyst, said it is sad that Pick n Pay could not find anyone younger from either within or outside its ranks.
“The landscape has changed considerably in 16 years, but Summers is a born trader and I’m doubly sure is up to the challenge. But it won’t be easy.”
Anchor Capital CEO Peter Armitage welcomed the appointment: “Summers is proven and one of the best retailer brains in the country.
"[His] institutional knowledge and experience are invaluable and [it] means that the new CEO is not on a 12-month learning journey.”
Armitage said the Ackerman family and Summers have a good relationship.
“Chemistry is obviously also important and the board and family know how to work with him. It’s a great challenge for Sean, but we believe he is the man for the job.”
The Pick n Pay board said it decided on the change of leadership due to difficulties in the business. Chair Gareth Ackerman said: “Unfortunately, in a very difficult environment, the performance of our core Pick n Pay business has been very challenging over the past months and has not met expectations. Pieter accepts that the board has decided on a change in leadership.”
Boxer, which serves the low-income market, and Pick n Pay’s clothing business continue to perform well. Boone led the Ekuseni strategy to split Pick n Pay stores into two divisions: Qualisave stores focused on low-income consumers and upper-end Pick n Pay. And he planned to further expand the Boxer brand.
Ackerman said: “I want to thank Pieter for his dedication to Pick n Pay over the past two-and-a-half years. He became our CEO while the Covid-19 pandemic was still raging, and has led the business through some extraordinary challenges, including the transition out of the Covid-19 lockdown, the unprecedented civil unrest in 2021, and the current load-shedding crisis.”
Summers said he is excited to be coming home to Pick n Pay.
“Retailing is my passion, and this company is in my blood. I enjoyed the most extraordinary years working with the late Raymond Ackerman and we retained a deep personal relationship to the end. The best way I can honour Raymond and Wendy’s legacy is to put Pick n Pay back onto its rightful path to growth and success.”
However, Summers is returning to a much more challenging environment with constrained consumers and Checkers as a market leader.
Sasfin analyst Alec Abraham said: “I think he has his work cut out for him because the competitive environment is much tougher than before and the Pick n Pay base is so much weaker.”
‘Brilliant move’
Independent analyst Chris Gilmour, who was a retail analyst when Summers was CEO, said the appointment is a “brilliant move”.
“It’s better late than never. Summers will sort out the problems — no doubt about it. But it will take time. Pick n Pay is currently in an awful mess with far too much debt.”
Pick n Pay released a trading update on Monday that warned of a worsening performance in its half-year to August 27 in its core brand, even as its clothing and liquor businesses grew sales. Initially, it had said the first-ever loss was due to one-off costs related to moving distribution centres, a voluntary retrenchment process and load-shedding expenses. But it has now admitted it will run at a loss even without these one-off costs, which amount to R565m.
Core stores increased sales 0.3%, but prices rose more than 8.3%. This shows it lost 8% in sales volumes.
Pick n Pay said the group’s profit margin was down because of the highly promotional trading environment. Many consumers are buying goods on special offer due to the weak economy.
A year ago, Financial Mail reported that RMB Morgan Stanley analyst Sean Holmes calculated that losses in the corporate division of Pick n Pay might have risen to as much as R1.2bn in 2023. At the time Boone denied there were losses, despite the persistent industry rumour that the core business was losing money.
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