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Woolworths chairman leaves as profit slides

Aug 28, 2015
Outgoing Woolworths chairman Ralph Waters

Outgoing Woolworths chairman Ralph Waters

Woolworths has completed the first part of a senior leadership overhaul as it tries to recover ground lost to its major supermarket rivals.

Chairman Ralph Waters is stepping down after the once market-leading supermarket giant suffered a 12.5 per cent slide in its full year profit. He’s being replaced by Origin Energy chairman Gordon Cairns.

Cairns’ most pressing task is the appointment of a new chief executive to replace Grant O’Brien, who has already said he will step down once his successor has been found.

“The CEO search process has been underway since June and is progressing well,” Cairns said.

Waters’ departure is the latest in a string for Woolworths, which also owns struggling discount retailer Big W and liquor business Dan Murphy’s.

Big W managing director Alistair McGeorge resigned last week. Woolworths said it was for health reasons, but it has acknowledged he’d been the subject of complaints about his behaviour.

Supermarkets director Tjeerd Jegen, supermarkets finance director Martyn Roberts and chief marketing officer Tony Phillips have also left in 2015.

Woolworths made a net profit of $2.15 billion for the year to June 30, down from $2.45 billion in 2013/14, amid fierce competition in the increasingly crowded supermarket sector from the likes of arch rival Coles and German retailer Aldi.

Woolworths’ core food and liquor business lifted total sales 2.3 per cent for the year, while comparable sales were up just 0.7 per cent despite a $200 million second-half outlay on improving its supermarkets by lowering prices and raising the quality of its products.

By comparison, Coles recorded a 5.3 per cent rise in total sales and a 3.9 per cent increase in comparable sales for the same period.

“The market environment has changed dramatically with stronger competition and significant shifts in customers shopping behaviour,” O’Brien said.

“Woolworths is evolving and innovating to meet these challenges and finding new ways to delight our customers.”

Cairns and the new chief executive must decide what to do about Woolworths’ 58 Masters hardware stores, which it had hoped would rival the dominant Bunnings chain operated by Coles’ parent company Wesfarmers.

Woolworths said it still planned to open between five and eight Masters stores per year “for the next few years” after the chain’s loss before interest and tax widened 39.5 per cent to $245.6 million for 2014/15.

Big W has also been a drag on profit, with same store general merchandise sales to which it contributes dropping 7.2 per cent to $4.1 billion. Woolworths spent $148 million trying to turn around the business during the year.

Excluding the one-offs and additional costs, the company’s profit was flat compared to a year ago.

Woolworths maintained its fully-franked final dividend of 72 cents per share.
WOOLWORTHS PROFIT DIVES

* Net profit down 12.5pct to $2.15b

* Sales down 0.2pct to $60.7b

* Final dividend flat at 72 cents

– AAP

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