Pick n Pay hopes Summers will bring the sunshine to end its gloomy winter

2 Oct 2023

The retailer’s share price plummeted on Monday after it issued a dire profit warning and the resignation of Pieter Boone. With Sean Summers’s reappointment as group CEO, Pick n Pay is hoping to be back in the ring.

In the 16 years since his departure from Pick n Pay, competitors have not only gained market share but have been eating its lunch as the retailer played catch-up on just about every front.

Now, with Sean Summers’s reappointment as group CEO, Pick n Pay is hoping to be back in the ring, after weak consumer demand, the costs of rolling blackouts and increasing competition piled pressure on the retailer’s margins.

On Monday, Pick n Pay issued a Sens announcement in which it welcomed Summers back to the fold while issuing a startling profit warning. The announcement sent the share price plummeting: by 12.30pm, it was down almost 15%, after stating that it expects to report a half-year loss of between 79.31 and 98.18 cents per share, which is down between 184% and 204% year on year.

Summers’s reappointment comes at a critical time for the retailer, which has warned for months that it was under significant pressure.

In July, Pick n Pay said it had faced abnormal costs of R610-million due to the increased expense of rolling blackouts, a duplication of supply chain costs and restructuring costs.

Between March and June this year, it spent R300-million on diesel to run generators.

It also incurred a R110-million duplication of supply chain costs during its Longmeadow/Eastport distribution centre handover, and R250-million anticipated for restructuring costs.

Summers Pick n Pay Pick n Pay's new CEO Sean Summers. (Photo: X – formerly Twitter)

Back in the fold

Described by insiders as a “combative” yet popular master retailer, Summers takes over from Pieter Boone with immediate effect. Boone, who was group CEO for just more than two years, has resigned and will be assisting Summers through a short handover period.

Summers spent 33 years with Pick n Pay: he was its managing director from 1996 to 1999, when he became CEO. He left the group in 2007, at the height of a highly successful period for the retailer, and took a sabbatical before being appointed to head up Steinhoff’s 450-store UK bed and furniture chain.

We owe it to (Raymond’s) legacy and to Wendy (Ackerman, his widow and co-founder of Pick n Pay) to restore the company to its rightful place.

He told Daily Maverick that he had kept in regular contact with Pick n Pay co-founder Raymond Ackerman, specifically over the past few years, and it became apparent that Pick n Pay was not in a good space.

Ackerman’s passing drove home the need for the retailer to get back on track.

Summers, who is currently London-based, has remained close to the Ackerman family. Ackerman had viewed Summers as “an excellent leader, who achieved remarkable things at Pick n Pay”.

Summers said the appointment happened “very, very quickly”.

“I came back to South Africa to pay my respects to Raymond on his sad passing, and Gareth (Ackerman, Pick n Pay’s chairperson) and I reinitiated discussions about my return.

“We owe it to (Raymond’s) legacy and to Wendy (Ackerman, his widow and co-founder of Pick n Pay) to restore the company to its rightful place.” While Boxer and Pick n Pay Clothing are doing very well for the group, core retail operations – the bulk of the business – need a major revamp.

A candid Summers said Pick n Pay had fallen woefully behind – much like it was in the mid-1990s, when it was in a bad cycle. “We picked it up. We revitalised the stores and completely redid fresh foods.”

Pick n Pay, he believed, has lost focus on what made it great: its biggest competitor, Checkers, has basically done what Pick n Pay once did.

“If you look at the things that people really enjoy about Checkers today – the fresh foods on the floor, the deli, the cheese bars, and ranges and all exciting products, we just need to reinvigorate to make our stores appealing once more. We need to get back-to-basic retail trading: buying and selling.”

Time for a change

Gareth Ackerman, meanwhile, thanked Boone for his dedication to Pick n Pay over the past two-and-a-half years. In a statement he said Boone became CEO while the Covid pandemic was still raging, and has led the business through some “extraordinary challenges, including the transition out of the Covid lockdown, the unprecedented civil unrest in 2021, and the current load shedding crisis”.

“Despite this, he devised and led the launch of our Ekuseni strategic plan, overseeing the very pleasing acceleration of our Boxer, Clothing and Omnichannel growth engines, and launching our new QualiSave brand.

“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. He leaves us with our heartfelt thanks and best wishes for the future.”

In welcoming Summers, Ackerman said his knowledge and experience were unrivalled.

“He is passionate about getting Pick n Pay back on to the right trajectory and winning the trust and confidence of customers new and old. He is absolutely the right person for the job at this time.

“Sean is an inspirational leader. He will galvanise our teams, energise them to give everything for our customers, and delight the communities we serve.”

The group plans to release its financial results for the 26 weeks ended 27 August 2023 on 18 October 2023. DM

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Back in the fold

Time for a change