‘Strap in and hold on’ – Sean Summers’ plan to save Pick n Pay 

Earlier this month, Pick n Pay announced that Pieter Boone was stepping down as the company’s group CEO and would be replaced by Summers, who was Pick n Pay’s CEO between 1999 and 2007.

Summers is a Pick n Pay stalwart who worked for the company from 1974 to 2007. He became managing director in 1996 and CEO in 1999. During his tenure as CEO, he made Pick n Pay the clear grocery market leader in South Africa.

Under Boone, Pick n Pay started to lag behind the market as its earnings and revenue could not keep up with its competitors.

Mid October when Pick n Pay released its results for the 26 weeks ended 27 August 2023, they revealed a disappointing first-half performance. Group turnover increased 5.4%, but the trading profit margin declined to 0.1% from 2.4%. Trading profit declined by 97.5% from R1.25-billion to R31.8-million.

Pick n Pay’s headline earnings per share declined by 241.5% – from earnings of 97.73 cents per share to a headline loss of 138.24 cents per share.

Pick n Pay chairman Gareth Ackerman said the performance of their core Pick n Pay business has been poor over the past months and has not met expectations.

The market did not react well to the company’s poor results, as Pick n Pay’s share price fell by around 14% on the day.

Summers told Daily Investor he wanted to return to the retailer because Pick n Pay has always been the “love of his life” despite leaving it 15 years ago.

“It distressed me as much as the chairman to see the situation that Pick n Pay ended up in,” he said.

Despite the company’s current situation, Summers is optimistic that there is still space in the market for Pick n Pay. “I think if we apply our minds correctly, we can come back and carve back its place in the marketplace,” he said.

“It’s about putting that passion back into the business, and that passion has to be shared by everybody. Every associate in the business should feel that same love and sense of belonging.”

Summers said Pick n Pay’s biggest challenge is getting positive momentum back into the business. However, while Summers believes it is his job to revitalise the company, he said it is important to be realistic.

He estimated that it would take around two years for the market to notice a significant turnaround in the company. “That’s why I said to the market when we announced our results, ‘Strap in and hold on’ because it’s gonna be bumpy for a while,” he said.

“I never, ever make promises that I can’t keep, and I’ve always believed that the most important thing in life is the truth. What I’ve tried to do is tell the truth to the market – this is our situation, this is our bedrock. Things will get a little bit more busy from here, and we will come out on the other side.”

Summers believes that, despite the company’s downward trend over recent years, “People out there in South Africa want their Pick n Pay back. We took it away from them. They didn’t take it away from us, and they want it back.”

He explained that Pick n Pay’s core business has lost its edge. This is because the company’s products, presentation and variety have not kept up with the rest of the market.

“For a period of 10, 12 years, the company took their eye off the ball,” he said.

Summers said the company has had many interventions to address this over the past decade, with many outside advisors and consultants, ultimately placing the company where it is today.

“I think the outcomes that we have here have just been the result of too many opinions, too many committees,” he said. “So our immediate focus moving forward is looking at what support there is for the people in the stores and how we can get more of this support and improve communication in the company.”

He said the Ekuseni strategy implemented under the previous management had good intentions and delivered some results. However, it did not focus enough on proper training in stores and investment in the company’s core stores to keep them up to pace.

“I think, to a degree, what happened was too much concentration on support office and centralisation and all of this stuff, and they have taken away too much of the energy that used to be in the company.”

Summers believes the best strategy for Pick n Pay going forward is ‘store by store, door by door’.

This involves Pick n Pay focusing on its command structure and supporting every store in Pick n Pay’s fleet. 

While he acknowledges that there is pressure on him as the new CEO, he is realistic about what he can achieve in a short period and positive that the retail fundamentals have not changed since its departure.

Since taking back the reins at Pick n Pay, Summers said he has gotten to grips with what the company looks like from a structural perspective and identified ways to streamline and improve the company’s operations.

Source: Daily Investor