Guy Hayward's resignation as CEO of Massmart this week surprised the market, but it's been a hellish five years for retail and the group has the added burden of having to adhere to onerous legal compliance imposed by parent company Walmart.
A former Goldman Sachs banker who has always preferred a low profile, Hayward, 52, had been at the group since Massmart listed on the JSE in 2000. He had been CFO before he became CEO five years ago, when Grant Pattison left after a few years at the helm.
At the group's most recent results presentation, Hayward admitted the figures were "disappointing". Retailers across the board are battling with deflation and low consumer confidence, with few signs of economic growth.
The general retail index has risen 5.15% over the period Hayward has led Massmart but the company's market value has dropped nearly one-third in that time. When he took over, Massmart's share price was R136.45; it opened at R93.50 the day his resignation was announced.
Walmart is a giant in the US but has exited many of its foreign operations, including those in Germany and many in Brazil. There has been speculation it could quit SA, but this has always been denied. Though the investment return has not been stellar, Massmart has not been a burden to Walmart, unlike investments in Mexico, Brazil, India and China.
Since Walmart bought a 51% stake in the group in 2010 for $2.5bn (about R36bn now), turnover has jumped from R40bn to R90bn. But the deal has not had the major benefits for local suppliers through access to Walmart's global supply chain, or for consumers in terms of cheaper imports.
"It's been a profound disappointment relative to what we expected to happen when Walmart bought out the company," says retail analyst Chris Gilmour, calling Massmart's performance "dismal".
"They were stymied by unions and government in that regard in areas like bringing in cheap imports from China.
"The Massmart executives didn't do anything wrong. Makro is a much better company than it was, and the contribution by Game and Dion was hit by deflation and changes in technology."
Gilmour says Builders Warehouse is a good operation and is in a good space, and Cambridge is doing nicely.
"I think they've tried very hard but external forces have been against them. The group is consolidating and stabilising but unfortunately there's not a lot of growth. It's so bad it's hard to see where the growth is coming from.
"Competition is fierce and the economy is not growing rapidly enough. Hayward has probably just had enough," he says.
In March the group reported dismal results for the year to December - profits fell to R868.7m from R1.5bn the previous year.
Gilmour says the group now needs somebody who's a known retailer.
There have been suggestions that Massmart executives are not driving the company but that it is effectively run by Walmart, with local management as caretakers.
But insiders say this is not the case, and that Walmart chose to own less than 100% because it wanted local management to have skin in the game and be accountable to an independent board. So while the compliance programme has been a drag on Massmart and distracting for local management, the Walmart link has assisted the local retailer's move into food retail.
The compliance programme was put in place after Walmart was investigated for suspected violations of US anti-corruption law in its operations in Mexico, China, India and Brazil.
Sasfin senior equity analyst Alec Abraham says Massmart's performance has been erratic in a difficult environment.
"[It] has a high-volume, low-margin business model in an environment of low, but steady inflation. However, the South African trading environment hasn't been supportive of that model for the past few years . Given [this] business model there wasn't much that could have been done."
Abraham says the only way the company's fortunes will improve is if there's a structural change in the economy to drive sustainable economic growth and consumer wealth creation.
"With strong positions in many general merchandise categories, Makro and Builders Warehouse are holding on to market shares." But he says he questions the relevance of Game, because online retailers such as Takealot.com are taking business from it.
After Walmart's acquisition of a stake in Massmart, the expectation was of speedy expansion elsewhere in Africa, but this never happened. Hayward has said that resisting pressure to expand at all costs into Africa insulated Massmart from the economic headwinds experienced by many oil-dependent African countries.
Hayward, who said "the time is right to hand over the reins", will stay on to assist the board in appointing a successor and will step down before the end of financial 2019...