By: Vernon Pillay – IOL Business

Pick n Pay’s chairman, Gareth Ackerman, has conceded that the Ackerman family and the board made significant mistakes in recruiting people to head up their retail business and that they may have been mismanaged.

Ackerman said that the family was perhaps too unquestioning of their CEO’s (chief executive officers) in the past and added that Pick n Pay needed to focus more attention to “questioning everything” as it hopes to turn the retailer around.

“The board and the family needs to not only be supportive of management, it’s got to be there to be questioning,” he told News24.

Insolvency

The Pick n Pay business is currently technically insolvent as its liabilities exceed its assets.

According to the retailers audited results for the year ending February 25, 2024, Pick n Pay’s revenue increased from R109.28 billion to R115.37 billion, while trading expenses rose from R20.15 billion to R22.55 billion.

The company’s total liabilities exceeded total assets by R183 million.

Pick n Pay’s total assets amounted to R46.51 billion, while its total liabilities reached R46.69 billion. The retailer experienced a dramatic 373% decline in net profit, shifting from a profit of R1.17 billion to a net loss of R3.2 billion.

Ackerman said that the board placed too much trust on their former CEOs.

A tale of two CEOs

In October last year, Pick n Pay said that its chief executive, Pieter Boone had stepped down with immediate effect. He had been with the retailer for less than two-and-a-half years before he was shown the door.

Boone was then replaced by former CEO Sean Summers.

Summers was Pick n Pay’s CEO from 1999 to 2006. He returned to the helm in order to help bring back the company from the brink of financial disaster.

Moving forward

Now having acknowledged their past errors, Ackerman, who steps down as chair next year, said that his family will play a more active role in questioning the direction and operational performances of the group.

The Ackerman family own 49% of the shares in Pick n Pay and therefore does not have a controlling majority.

Ackerman also recognised his personal failures.

“And I think one of the fingers that could probably be pointed at me was that maybe I was too supportive over the years with not enough questioning, and the board not questioning decisions enough," he said.

"In the old days, we generally would not have questioned at the level that we could have in a board meeting. I would address the issues always with the CEOs (in private) and if there were problems, we would talk to them, but ultimately we trusted the CEOs to do what was best for the business.

"Whereas now I think, having been through what I’ve been through, I think we need to be a lot more questioning, and I think the challenge to all boards is to drill down a bit more, and I think there have been enough corporate issues over the last couple of years to warrant this," Ackerman said.

Pick n Pay’s recovery

The chairman is adamant that the retailer will recover and he is bullish about Pick n Pay’s future.

Ackerman said that the retailer is in the process of turning the corner and feels the worst is behind them.

"We’re on a multi-year transformational journey, but there’s a plan that has been put forward, and it has been shared with the market, and we’re on plan, and it's actually working well,“ he explained.

He has confidence in the new management team and their ability to turn things around.

“The new management team that has been put in place is delivering on what we want them to," he said.

Pick n Pay’s chairman, Gareth Ackerman, has conceded that the Ackerman family and the board made significant mistakes in recruiting people to head up their retail business and that they may have been mismanaged.

Ackerman said that the family was perhaps too unquestioning of their CEO’s (chief executive officers) in the past and added that Pick n Pay needed to focus more attention to “questioning everything” as it hopes to turn the retailer around.

“The board and the family needs to not only be supportive of management, it’s got to be there to be questioning,” he told News24.

Insolvency

The Pick n Pay business is currently technically insolvent as its liabilities exceed its assets.

According to the retailers audited results for the year ending February 25, 2024, Pick n Pay’s revenue increased from R109.28 billion to R115.37 billion, while trading expenses rose from R20.15 billion to R22.55 billion.

The company’s total liabilities exceeded total assets by R183 million.

Pick n Pay’s total assets amounted to R46.51 billion, while its total liabilities reached R46.69 billion. The retailer experienced a dramatic 373% decline in net profit, shifting from a profit of R1.17 billion to a net loss of R3.2 billion.

Ackerman said that the board placed too much trust on their former CEOs.

A tale of two CEOs

In October last year, Pick n Pay said that its chief executive, Pieter Boone had stepped down with immediate effect. He had been with the retailer for less than two-and-a-half years before he was shown the door.

Boone was then replaced by former CEO Sean Summers.

Summers was Pick n Pay’s CEO from 1999 to 2006. He returned to the helm in order to help bring back the company from the brink of financial disaster.

Moving forward

Now having acknowledged their past errors, Ackerman, who steps down as chair next year, said that his family will play a more active role in questioning the direction and operational performances of the group.

The Ackerman family own 49% of the shares in Pick n Pay and therefore does not have a controlling majority.

Ackerman also recognised his personal failures.

“And I think one of the fingers that could probably be pointed at me was that maybe I was too supportive over the years with not enough questioning, and the board not questioning decisions enough," he said.

"In the old days, we generally would not have questioned at the level that we could have in a board meeting. I would address the issues always with the CEOs (in private) and if there were problems, we would talk to them, but ultimately we trusted the CEOs to do what was best for the business.

"Whereas now I think, having been through what I’ve been through, I think we need to be a lot more questioning, and I think the challenge to all boards is to drill down a bit more, and I think there have been enough corporate issues over the last couple of years to warrant this," Ackerman said.

Pick n Pay’s recovery

The chairman is adamant that the retailer will recover and he is bullish about Pick n Pay’s future.

Ackerman said that the retailer is in the process of turning the corner and feels the worst is behind them.

"We’re on a multi-year transformational journey, but there’s a plan that has been put forward, and it has been shared with the market, and we’re on plan, and it's actually working well,“ he explained.

He has confidence in the new management team and their ability to turn things around.

“The new management team that has been put in place is delivering on what we want them to," he said.

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