SOUTH AFRICA – Pick n Pay’s founder, the Ackerman Family, has announced it will cede control over the retailer as part of the struggling retail company’s revamping strategy aimed at cutting debt and expenses, mitigating losses, and regaining lost market share.
Sean Summers will take over as the company’s new CEO, tasked with reviving a business that has lost significant market share to rivals like Shoprite and Woolworths over the past ten years.
Gareth Ackerman, the outgoing CEO, is set to retire as chairman, although he will retain an advisory and support role until the retailer releases next year’s financial reports.
The leadership change was announced barely a day after the retailer went into administration, culminating in severe financial challenges.
The retail group’s grocery Chain reported a loss of ZAR 1.6 billion (US$91 million) in the year ended March 2024, down from ZAR 1.8 billion (US$95 million) reported in the previous year.
Pick n Pay revealed losses were worsened by rising interest rates, a direct consequence of inflation following additional rounds of borrowing in the last financial year.
Summers announced a two-step revamping plan earlier in the year, which would include listing the retail group’s grocery wing and a rights issue meant to raise ZAR 4 billion (US$219 million), which would help offset the retail group’s ZAR 6.1 billion (US$334.2 million) debt.
Ackerman Investment Holdings (AIH) announced support for the recapitalization plan, pledging to invest ZAR 1.025 billion (US$56.2 million) towards the rights issue.
The company is also expected to shut down as many as 100 stores in South Africa as part of its expense-cutting strategy.
This store reduction comes a few months after Pick n Pay’s biggest rival, Shoprite, announced it added more than 200 new stores from July to December 2023 in an expansion effort that will increase its market share.
The retail group is also expected to put some of its stores under franchise ownership to attract investors. However, analysts predict it will be difficult for the retailer to convince potential investors invested in purchasing franchised stores it can operate independently and profitably on its own.
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