TWO CAPE Town headquartered retail heavyweights – supermarket group Pick n Pay and fashion specialist Truworths International – have seen key changes to their respective leadership structures.
The top executive changes have been introduced at critical junctures for the businesses, which are both facing stern competition in their respective markets.
At Pick n Pay, Richard Brasher steps down next month as CEO after a successful eight year tenure. Under Brasher Pick n Pay introduced the Smart Shopper loyalty card initiative, honed distribution efficiencies and overall took on a leaner and meaner operating aspect.
Pick n Pay chairman Gareth Ackerman pointed out that Brasher had led a “remarkable turnaround” and contended that Pick n Pay was immeasurably stronger than in 2013. “He has almost doubled Pick n Pay’s store network, and has grown turnover from R55 billion when he joined the company to almost R90 billion…as well as delivering consistent and sustainable profit growth.”
Ackerman added that Brasher modernised the Pick n Pay business, expanding its offer and transformed efficiencies as well as transforming (subsidiary brand) Boxer into Africa’s fastest-growing limited range discounter.
Brasher will be replaced by Dutch national Pieter Boone, who has served as COO at Metro, a giant German group that specialises in cash & carry wholesale businesses across a range of markets.
At the time of writing, Boone had just landed in Cape Town and it was too early to draw any deductions about changes that might be implemented at Pick n Pay during his tenure.
Pick n Pay’s market share has been under consistent pressure from rival supermarket giant Shoprite, convenience store Spar and Woolworth’s grocery and clothing offerings.
Ackerman noted that Pick n Pay had many possible candidates for CEO. “But we knew when we met Pieter that we had found the right person. Pieter has exceptional global retail experience across a number of diverse geographies.”
Ackerman said Boone had consistently demonstrated the ability to lead and deliver sustainable growth in tough and emerging markets. “His wide-ranging experience will stand him in very good stead across all areas of the Pick n Pay business – including Boxer and franchise, our growing online offer, and our value-added services.”
In a press statement, Boone said Brasher was leaving the business in a very strong position, with huge potential to grow and serve more customers. “Retail is changing throughout the world, and my job will be to ensure that the Pick n Pay Group is at the forefront of change…”
Leadership changes are also transpiring at Truworths, albeit at a much slower pace despite the increased rate of change in the world of fashion retailing.
As part of its succession planning, the group appointed executive director Sarah Proudfoot as deputy MD of the group’s main operating subsidiary, Truworths Limited.
Proudfoot has been at the group since 2001, and served as a director of Truworths Limited since 2016 and of Truworths International since 2019.
According to a Truworths press statement, Proudfoot held several managerial and executive positions, has a wealth of experience in merchandise design, merchandise buying and planning, marketing and general management.
Truworths added that she had been a “significant contributor” to the strategy and direction of the group.
Proudfoot retains her duties as executive director for ladies’ merchandise .
The obvious speculation is that Proudfoot is being set up to succeed long-serving Truworths CEO Michael Mark – who has led the group for an astounding 30 years. Mark, who is in his late sixties, is expected to retire in 2022 – but should have retired five years ago when Truworths appointed French retail expert Jean-Christophe Garbino as CEO designate.
Garbino – although highly rated as a modern retailer – never seemed to find traction in the corridors of power at Truworths. He left after nine months.
A number of investors have raised concerns about Mark’s long tenure at the helm. Rival retailer, The Foschini Group, – which has outperformed Truworths on a number of metrics – has in the last 30 years seen more than a handful of CEOs that have honed the business model to the fast-changing nature of the fashion retailing segment.
Contrasting niche performances
TWO CAPE-based niche retailers have seen starkly different performances under the restrictive Covid-19 lockdown environment.
Catalogue retailer HomeChoice – which already reported a more than 50% decline in profits in the half year to end June – is till battling along. The group advised its shareholders to expect a similar performance in the second half of the financial year to end December 2020.
That means bottom line profits for the full year could be down between 52% and 67% compared with the previous financial year.
HomeChoice did, however, note that the group’s liquidity and capital position continues remained strong thanks to a focus on cash generation and management of working capital. Cash on hand was a reassuring R415 million, up from R378 million at the end of June last year.
Agribusiness retailer Kaap Agri, on the other hand, is in a sweet spot with farming conditions much improved.
In a first quarter update for the year to end September 2021, Kaap Agri – which owns the Agrimark retail brand – pencilled in a nearly 17% increase in revenue and a 20% jump in gross profits.
Earnings for quarter one grew by a hefty 36% from R83.5 million to around R114 million with CEO Sean Walsh noting strong operational performance across all divisions.
While the various Agrimark formats – which cover large stores, convenience stores, liquor outlets and building supplies – performed stoutly, Kaap’s fuel retailing segment (housed under The Fuel Company) saw an encouraging recovery.
The group reported total retail fuel litre growth of 8.8% – although on a like-for-like basis retail fuel volumes decreased by 8.1% from the corresponding quarter last year.
More importantly, though, retail fuel gross profit per litre increased by 12.1%. Convenience store and quick service restaurant – that operate on fuel forecourts – saw gross profit increasing 23%.
Walsh said fuel litre growth was expected to continue.
In Kaap Agri’s grain services division, the recent wheat harvest intake was the largest in 10 years. Walsh believed that, given the volume and timing of wheat sales in the first quarter, the expectation was that profit before tax within the grain services division will be higher in the first six months of the financial year compared to the second six months of the financial year.
Looking ahead, Walsh said the overall agriculture outlook was positive – but warned that wine grape farmers might experience cash flow pressure (presumably after the lengthy alcohol sales bans due to Covid-19 lockdown restrictions).