Massmart Chief Executive Guy Hayward will step down before the end of the year, the South African retailer said on Monday, ending five years at the helm of the supermarket group as it plans to expand further in Africa.
The 52-year-old's departure comes after the group reported a sharp fall in full-year earnings in February and unveiled plans to add 47 new stores between 2019 and 2021 with about a third of them outside its home market where growth has stagnated.
Hayward felt that ahead of South Africa's general elections this week, that the time was right "to hand over the reins for the next phase of Massmart's and the country's growth", Group Corporate Affairs Executive Brian Leroni said in an emailed response to questions. He did not elaborate.
"The process to appoint Guy's successor is underway and the board will make further announcements in due course," the retailer, which is majority-owned by Walmart INc, said in a statement.
The exact timing of Hayward's exit is still to be confirmed.
"It's never good news when a CEO resigns and they haven't got a replacement for that person immediately," said FNB Wealth and Investment Portfolio Manager Wayne McCurrie.
"Although he's staying until the end of the year to help the new successor - the mere fact that you haven't got any sort of contingency plan tells you that it was a little but unexpected."
Massmart's share price has declined by more than 32% since June 2014, when Hayward took over as CEO, underperforming rivals Shoprite and Pick n Pay whose shares rose 11.5% and 19%, respectively, over the same period.
Like many retailers in South Africa, it is grappling with a squeeze on margins, higher costs and soft sales compounded by depressed consumer spending in a low growth economy.
But unlike Shoprite, Massmart has expanded into Africa slowly and cautiously to avoid a hit from commodity producing markets, surprising some investors who had expected a more aggressive approach after the Walmart deal.
The retailer, with presence in 13 countries in sub-Saharan Africa, said the executive management team along with Haywards' successor "will continue to focus on the improvement of Massmart's high-volume, low-expense business model".