• Tobacco and alcohol ban impacts on company sales and cash flow. 
• There is no plausible explanation for the government banning the sale of these products during the pandemic, said Ackerman. 
• Ackerman said the company would never use a crisis to raise prices unscrupulously.

Pick n Pay chair Gareth Ackerman has slammed the ban on alcohol and tobacco sales, saying the government owes it to its people to explain the reasoning behind it.

This came on the back of an announcement that more than 1 400 staff members at Pick n Pay had taken voluntary severance packages since March. 

The retailer has suffered crippling losses despite being among the essential services that was allowed to remain open during lockdown Level 5.

In an AGM on Tuesday shortly after the trading update for the company was released, Ackerman delivered an address to shareholders.

He said that that the government’s decision to ban the sale of alcohol and tobacco has created cynicism and is dividing the people from the government.

Alcohol and tobacco sales have been prohibited since 27 March, at the start of lockdown. The prohibition on alcohol sales was briefly lifted on 1 June only for it to be reinstated with immediate effect on 12 July.

Ackerman said although the company supports many of the difficult decisions taken by government, there has been little to justify the continued prohibition of alcohol and tobacco. He also said the prohibition of these substances impacts on company sales and cashflow.

"The government has on several occasions reassured that they are listening and consulting. But we see little evidence of this," he said.

The chair then said there is no plausible explanation for South Africa banning the sale of these products during the pandemic.

"What explanations we have been given have been confusing and contradictory," said Ackerman.  

Ackerman briefly touched the topic of fair pricing. At the start of the lockdown, a Pick n Pay branch in Cape Town was among 11 supermarkets acting commissioner of the National Consumer Commission Thezi Mabuza named during a briefing on antitrust body's investigation of alleged price gouging.

Ackerman said the group was committed to not using the pandemic to raise prices.

 "I will reiterate the commitment we gave at the beginning of the crisis. We will never use a crisis like the current one as an excuse to raise our prices artificially. We will always give our best value to our customers," he said.

Earnings

In a trading update, the group said it anticipates that headline earnings per share for the 26 weeks ended 30 August, would be down more than 50% due to the company still grappling with effects of Covid-19.

More than 1 400 staff members have taken voluntary severance packages since March, the retailer said in the trading update.

Ackerman said one of the most important things to do is to safeguard the future of the business, and that is why in May they decided to defer their annual dividend.

The future

It was announced that current CEO, Richard Brasher, will be leaving the company after seven years of service. He was going to announce his retirement in May but decided to stay on and assist the company in navigating the crisis.

"We had started the process to find his successor in good time. As with so much else, Covid-19 has disrupted this process. But we are making progress and will make an announcement when we are ready to do so," said Ackerman.  

According to Ackerman, managing the country’s economic recovery will require "a great deal of finesse and extraordinary focus on rapid implementation of reforms which the government has already committed to".

He added that the government will have to be far defter in getting the economy back on its feet.