Outgoing Pick n Pay chair Gareth Ackerman has expressed optimism about the government of national unity (GNU), which he views as a potential catalyst for much-needed economic growth.
His remarks come amid a period of transformation for the retail giant, which has been grappling with a declining performance over the past few years.
Addressing shareholders at Pick n Pay’s AGM on Tuesday, Ackerman acknowledged the political and economic turbulence gripping global markets, and cited political instability as a major contributor.
However, he struck a hopeful tone regarding the early signs of positive change in SA after the recent formation of the GNU.
“For a change, we are seeing signs of optimism in SA as we start to witness the early benefits of a new government of national unity,” said Ackerman.
He called for the government to implement sensible policies, enforce effective controls and collaborate with the private sector without relinquishing its responsibilities.
Pick n Pay faces significant headwinds. The company has struggled with falling sales in its core supermarket division, despite continued growth in its Pick n Pay Clothing and Boxer Superstores segments.
Ackerman said the board had grown increasingly concerned about these challenges since last year’s AGM, leading to Sean Summers’ reappointment as CEO.
Ackerman emphasised the gravity of the retailer’s situation over the past few months, describing the substantial efforts required to regain stability.
He said that while external observers may not fully comprehend the magnitude of the task, Pick n Pay had been deeply focused on addressing its financial and operational difficulties.
The finance team and board members had been particularly active, he said, participating in intensive meetings to manage the balance sheet and steer the company back to profitability.
“I am pleased to tell you that this focus is starting to bear fruit,” said Ackerman.
He credited the company’s early signs of recovery to the decisive actions taken, including Summers’ return. Deemed a retail titan, Summers was brought back to address the group’s declining performance.
A key component of the recovery has been a two-step recapitalisation plan designed to stabilise Pick n Pay’s finances and reduce its debt.
The first step involved a R4bn rights issue, which was oversubscribed, and the second includes the planned initial public offering of Boxer Superstores later this year, with the aim of further strengthening the group’s financial state.
At the heart of this rights issue is the Ackerman family’s hold on the retailer. Ackerman reaffirmed the family’s longstanding philosophy of supporting “what is right” for the group while maintaining a non-intrusive stance in its day-to-day management.
He said that although family members had held advisory positions, they had stepped back from direct executive involvement for several years, allowing professional management to operate independently.
The Ackerman family recently reduced their voting stake from 52% to 49% by relinquishing 3% of their voting rights.
Pick n Pay shareholders are bracing for tough times ahead as the retailer expects a decrease of more than 20% in earnings for the six months to August 25.
This forecast highlights the scale of the task ahead for Summers, who has been charged with the group’s turnaround within three years.
“The group advises shareholders that it expects earnings per share (EPS), headline earnings per share (HEPS) and comparable HEPS for H1 FY25 to decrease more than 20% when compared to EPS, HEPS and comparable HEPS reported for H1 FY24,” the group said.
“This outcome is broadly in line with the expectation communicated by CEO Sean Summers at the FY24 results presentation in May 2024, in which he noted that the situation may well get worse before it improves.”
The urgency of Pick n Pay’s situation became clear earlier in 2024 when it swung from a R1.17bn profit in the 2023 financial year to a R3.2bn net loss in the 2024 financial year.
Its cash cow, Boxer, was a standout performer in the first six months of the financial year, with sales growing by 13.5% overall and 9.2% on a like-for-like basis.
Boxer’s success was driven by a strong like-for-like performance and new store openings, contrasting with the struggles of the Pick n Pay segment.
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