Did Woolies really have to buy in2food? And other Sens questions

Presumably, Woolworths will not be moving into clothing manufacturing; there is only so much vertical integrating you can do. And let’s face it, there’s not much in Woolies’ FBH (fashion, beauty, home) division that would justify splashing out a couple of billion rands to secure supply chains. 

The announcement on its acquisition of in2food included a litany of reasons why it made so much sense for the group’s star performer, the food division, to buy up one of its suppliers: strengthen supply chain resilience; further differentiate its premium food offering; scope for greater agility and efficiencies; opportunities for new product development, etc etc. 

The key motivation seems to centre around the desire to protect its food division’s highly profitable premium position in the market. 

By this logic – to protect a strong market position – shareholders will not have to worry about future deals designed to tie down companies that supply fashion, beauty and household products. 

But even as it’s nice to know the Woolworths board now believes it doesn’t have to go outside South Africa to do a deal, it’s worrying the directors still believe they had to do a deal at all.  

A full plate

The fact is Woolworths has enough on its plate – basic stuff like improving stock selection and management – to keep its strained executives from wandering off into new territory.  

It’s not as though in2foods was going to flit off and take up with some other retailer, either. The vast bulk of its output ends up on Woolies shelves. Indeed, Woolies is such an important customer it was probably in a position to call most of the shots at in2foods without having the burden of owning the business.  

Woolworths Food is known to be particularly demanding, in many cases insisting on exclusivity from its suppliers. That’s something it can get away with because it has such a strong position in its market segment. 

In general, backward integration doesn’t work terribly well for retailers, which is why it’s so rarely done.  

And what does incoming CEO Sam Ngumeni think of it all? As head of the food division, he was presumably instrumental in the discussions. It’s a shame the announcement didn’t include some comment from him, given that the success or failure of the deal will be laid at his doorstep. 

Comings and goings 

Staying with retail came the announcement that Leon Lourens has stepped off the Boxer board, where he’d been an independent non-executive director for a few years. Lourens was best known for his 32-year stint at Pepkor, including as CEO from 2017 to 2023; an extremely tough gig given that it was in the wake of the Steinhoff collapse. Then there was Covid, and some rather nasty business over share options. 

So, it was probably not a huge surprise that he decided to take early retirement in 2023. Arguably it was a surprise to the board, as the only person they could find to replace him was Pieter Erasmus, the former CEO (from 2001 to 2017). 

Lourens, who is 60, has left Boxer to take up the position of CEO at Econofoods, a 30-year-old company that, according to its website, sells frozen and chilled foods as well as a wide variety of groceries. 

In other director moves, an announcement from Shoprite about the departure of one of its independent non-executive directors could have been the first of its kind. Nonkululeko Gobodo was quitting the board with immediate effect, the end-February Sens notice revealed. Nothing new there, but then came: “Her resignation follows the identification of a conflict of interest in relation to a current directorship within the financial services industry.”  

This seemed a tad strange given that the only other boards Gobodo serves on are PPC and Lesaka Technologies. As we all know, PPC is in cement. Lesaka is a fintech company providing banking, lending and payment solutions to formal and informal businesses, particularly in townships.  

And therein lies the problem. Shoprite is pushing into financial services as a strategic growth area – like so many other companies. This, it told Currency, is where the “potential conflict of interest was identified”. 

Kudos to Shoprite, then, given how rarely companies take conflicts of interest seriously. 

Over at Nampak, CFO Glenn Fullerton announced his resignation, effective end-August. That’s six months’ notice, which is as it should be in a well-run organisation. Fullerton, who was appointed in September 2015, is one of the longest-serving executives at Nampak. For the past few years he worked alongside Phil Roux, who was appointed CEO by A2 Investment Partners in 2023 to rescue the long-troubled packaging group. Roux, who pulled off a remarkable improvement in the group’s performance, had planned to retire last October but extended his term for four months when his planned replacement, COO Andrew Hood, unexpectedly resigned.  

Yet Fullerton’s resignation was announced just one month after the new CEO, Riaan Heyl, took up the position. This is a worrying level of executive churn for a group that is still in the midst of a turnaround.  

In the woodchipper  

Talking of A2 Investment Partners, the announcement by York Timbers – another of A2’s investee companies – that its CEO, Gabriël Stoltz, was quitting at the end of March has understandably rattled shareholders. The share price slumped on the news to a two-year low of 180c.  

It probably wasn’t just the announcement of Stoltz’s departure that troubled investors; an updated trading statement released 90 minutes earlier, was both scary and almost incomprehensible, given York’s first trading statement was issued just seven days before.  

The two statements produced frighteningly different figures – never a good sign – and may or may not be attributable to a change in accounting policy effective from July 2025.  

Some light may be shed on it with the release of end-December interim results on March 31.

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• Woolworths exorcises ghosts with in2food purchase

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