Boone out as Pick n Pay CEO, Summers back in

The board believes Sean Summers can steer the retailer back to its glory days of dominance in the grocery retail space.

Pick n Pay CEO Pieter Boone has resigned from his position with immediate effect after just over two years at the helm of the JSE-listed grocery retail giant and he will be replaced by former CEO Sean Summers.

The retailer revealed Boone’s exit in a Sens announcement on Monday with board chairman Gareth Ackerman confirming the board chose to go in a different leadership direction after the grocery group failed to hit performance targets in its core operations.

Read: Retailers going backwards as SA consumers buckle

Pick n Pay also published a dreadful trading update with the Boone exit announcement, flagging a loss for a “challenging” first-half for FY2024.

The announcement and update saw the group’s share price plunging over 13%, trading around R31.86 a share just after 10am on Monday.

Pick n Pay’s share price

Boone will reportedly stay around for a “short handover period” Pick n Pay told investors.

Ackerman in his statement acknowledged the Netherlands-born CEO’s efforts in trying to steer the retailer through a health and economic crisis in 2021 after taking over from Richard Brasher who vacated the position that same year. Boone was tasked with navigating Pick n Pay through the Covid-19 pandemic and the devasting July riots.

He was also the implementing lead of the group’s Ekuseni strategic plan which was aimed at expanding the retailer’s reach across different consumer categories. The plan saw the expansion of Boxer stores and the rollout of QualiSave stores – both meant to compete with its main competitor Shoprite Group’s Shoprite and Usave offerings in the lower segments of the grocery retail market.

“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,” said Ackerman.

“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.”

Summers’ return

Summers, who was Pick n Pay CEO between 1999 and 2006, has won the board’s endorsement to “turn around the performance of the group’s Pick n Pay Retail core engine”.

From the group’s statement, it is clear the board believes Summers is the best candidate to return Pick n Pay to its glory days.

An effort was even made to dig up an old quote by the late, great founder of the group Raymond Ackerman, who is said to have described Summers as “an excellent leader, who achieved remarkable things at Pick n Pay”.

“We are delighted that Sean is coming back to Pick n Pay. His knowledge and experience is 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,” chairman Gareth Ackerman added to the praise.

Unlike Boone, Summers was also given space to share a few words of excitement on the latest leadership changes at Pick n Pay, commenting; “I am looking forward tremendously to meeting our teams up and down the country. We are in this together, and we will succeed together.”

“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. I worked closely with Gareth for many years, and we will make a great team together,” Summers added.

Interim loss

In a trading update, Pick n Pay noted that the strong performance by Boxer, Pick n Pay Clothing and Liquor stores together with the online sales divisions failed to offset the poor performance recorded by core Pick n Pay stores and spiralling costs.

As such, the retailer has prepped the market for a pro forma headline loss per share of between 121.77 and 139.52, down from the 88.76 cents Heps reported in the previous period, as weaker-than-expected gross profit margins were recorded.

“This was a consequence of a highly promotional trading environment, which impacted both sales growth and gross margin, and included the impact of supplier incentive income for the period being finalised at below our previous expectations,” the group said.

Further weighing on the group’s interim performance is the expected incremental abnormal cost of about R565 million, which Pick n Pay has revised down from the R610 million figure reported in an earlier trading update released in July.

Incremental costs were pushed up by higher diesel costs, employee restructuring costs and duplication of supply chain costs during its Longmeadow/Eastport handover.

According to the retailer, the total cost of running generators was R396 million, while the net incremental energy costs came in at R190 million. Employee restructuring costs were reported at R259 million, however the group noted that the restructuring process will save it about R300 million in annualised on-going cost savings. Additionally, a total of R116 million was spent in relation to the sale of the distribution centre in Gauteng, it said.

Although expectations for the second half remain bleak, the group says it hopes to see a recovery in earnings as it looks to the golden quarter of the festive spending period.

Source: Money Web