Gareth Ackerman will vacate the chair of Pick n Pay Group as part of a vigorous shake-up of the struggling retailer’s governance and shareholder structure.
As part of this, the Ackerman family will step back from control of the business while still taking up a rights offer announced in February.
Ackerman, the group’s long-standing chair and son of the retail giant’s founder, Raymond Ackerman, told Business Day that the company “needs a total refresh” and that his departure as chair was the first step in a whole-business change that would sweep through to the board and management.
He said the Ackerman family was “following their rights” to reinvest in the company as part of a rights issue announced in April while also stepping back from control of the business. “We will forego our shareholder majority voting control and reduce our representation on the board to three, that currently being myself, my sister Suzanne and my brother Jonathan.”
It is likely that this arrangement was necessary for the group’s lenders and other shareholders, especially institutional shareholders, to take up the offer to raise R4bn required alongside a planned separate listing of retailer Boxer, which targets lower-income customers. On this basis, long-term lenders would “redo the covenants” on some of the group’s debt, which stood at R7.2bn in February.
“There aren’t really any Ackermans running the business any more and perceptions and reality do not always meet, but that’s separate from the issue of control, and the other shareholders have all had ongoing agendas.”
Ackerman said he had received feedback “that a controlling share in PnP is not desirable and that the family should take on a lesser stake”.
The decision on how to proceed had been “far from straightforward” in the Ackerman family and that there had been “a lot of discussions”.
There aren’t really any Ackermans running the business any more and perceptions and reality do not always meet, but that’s separate from the issue of control, and the other shareholders have all had ongoing agendas.
As part of the new arrangements, Ackerman would no longer chair the nominations committee and the family would no longer appoint the CEO and CFO.
Ackerman was quick to acknowledge the troubles the company faced, saying it “hit the wall” in 2023 due to “catastrophic management decisions” and load-shedding, which “sunk us”, but said that “the crisis has been a catalyst for change”.
Ackerman spoke about the fiercely competitive market, razor-thin margins, declining market share and declining performance of its core Pick n Pay supermarket business, saying that former CEO Pieter Boone’s “Ekuseni” strategy had been stopped dead by current CEO Sean Summers.
“Our mistake was to refresh old stores without addressing the underlying issues,” he said.
“In retail it’s about the mix and we made mistakes in the mix. We had the wrong range and mixes. It comes down to managing this better and not segmenting stores. We were worrying about the brand on the outside when the problem was inside.”
On market share, he said: “Our competitors have opened stores on every corner”, while questioning the sustainability of that approach.
Turnaround strategy
The group’s turnaround strategy, presented on Monday by Summers, has “been seen by more than just the board — the banks, the other shareholders. We’re doing some good work and there are positive signs.”
Ackerman said some stores would be closed, some resized and others expanded. Other than attending to the stores, he said the group would look at “how we buy, how we buy to sell, our supply chain and distribution, maximise use of our central distribution, grow clothing, make sure we have a healthy franchise business and keep a strong focus on costs”.
In management, Ackerman said fresh ideas and younger people were needed.
"[Summers] is on a three-year contract and one of his main KPIs (key performance indicators) is succession planning,” Ackerman said, saying that senior managers across the group had been incentivised to find younger talent, and they would look for new, younger nonexecutive directors.
Commenting on his father’s death in 2023, Ackerman said it had not affected decisions around the company.
“Nothing stays the same and we need to change — we really acknowledge this. This huge step-change takes us back to [Raymond Ackerman’s] principles, of looking after customers and society, and running an efficient business.”
Ackerman said he would remain a director of the company, as “the Ackerman name is important at Pick n Pay”, but that a suitable role for him had not yet been finalised.
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