Woolworths shakes up leadership team

Claire Peters, currently managing director of Woolworths Supermarkets, will take up a new position as managing director of B2B and Everyday Needs. In this role, Peters will take leadership of Woolworths Group’s portfolio businesses including BIG W, Woolworths International, Wholesale and Property. She will also take stewardship of the Group’s new partnership with PFD Food Services and join the Investment Committee of venture capital arm, W23.

“Claire has successfully led the ongoing transformation of Woolworths Supermarkets over the last three years,” said Woolworths Group CEO Brad Banducci.

“During her leadership we have seen significant increases in customer and brand metrics, implemented a new store operating model to better serve changing customer needs, implemented the foundation phases of Fresh Made Easy, evolved our store formats and materially improved supplier engagement. In more recent times, Claire has played a critical role in helping the Group navigate through COVID.

“In her new role, Claire will combine her detailed knowledge of the food and non-food retail environment to lead our important growth adjacencies. These areas of our business are critical to the next phase of our journey and we look forward to the opportunities that Claire and her team will unlock in her new leadership position.”

After two years as managing director of Woolworths New Zealand, Natalie Davis will return to Australia from October and assume the role of managing director of Woolworths Supermarkets.

Banducci said: “In the past two years, Natalie has led the growth of Woolworths New Zealand, worked to deliver improvements across customer, brand and reputation metrics and also rapidly grown Countdown X, especially in eCommerce. Natalie will work in partnership with the Food Leadership team to continue to transform our Australian Food Business.”

An announcement on the appointment of the new managing director of Woolworths New Zealand will be made in the coming weeks. In the interim, Sally Copland, general manager digital for Woolworths New Zealand will step into the role of acting managing director.

Managing director of Group Portfolio, Colin Storrie will take up a new role as managing director of New Business and Partnerships.

“Colin is, in many ways, the unsung hero of our senior leadership team, generally working behind the scenes on many strategic initiatives that have helped us build the business that we have today,” said Banducci.

Woolworths takes majority stake in PFD Food Services

Woolworths has extend edits strategic partnership with PFD Food Services by acquiring a 65 per cent equity interest in the business. Woolworths Group will also acquire 100 per cent of PFD’s freehold properties, which primarily comprise 26 distribution centres.

“We are excited by the opportunity to invest alongside the Smith family in PFD Food Services. It is a business we have long admired and we have a shared vision for continued innovation, customer focus and investment in the food sector. We look forward to delivering even better experiences together for our customers as we continue to respond to their changing needs in a post COVID world,” said Woolworths Group CEO, Brad Banducci.

“This investment is a logical adjacency for Woolworths Group and further supports the evolution of the Group into a Food and Everyday Needs Ecosystem. It will build on our existing partnership with PFD, the number two player in the large and fragmented out-of-home foodservice and non-retail business-to-business markets.

“The investment will also unlock synergies for both businesses across the combined network and fleet. We will help to support PFD’s growth through access to our logistics, digital and data analytics and operational capabilities. For Woolworths Group, it will enhance store range localisation and provide fleet synergies through better route and capacity optimisation across our combined network.”

PFD will operate independently under CEO Kerry Smith. A separate board and governance structure will be implemented, with Rick Smith, the founder of PFD, continuing to be involved.

“We are pleased to deepen our existing strategic partnership with Woolworths Group for the longer-term via their investment in our business. As a family owned and operated business which prides itself on its customer and supplier relationships, it is important that PFD operates as a standalone business, run by the existing team. In Woolworths Group, we are confident we have found a partner with shared experience and expertise, but also whose operations and vision for the future complement our own,” said PFD Food Services CEO, Kerry Smith.

Transaction details

Woolworths Group will initially invest $302 million in PFD to acquire a 65 per cent equity interest. The transaction implies a multiple of 11x pre-AASB 16 EBITDA  of $57 million assuming net debt of $157 million1. Woolworths Group will also acquire PFD’s freehold distribution centre properties for $249 million which will be leased back to PFD.
Like many other businesses, PFD’s current earnings have been impacted by COVID-19. Despite this, the investment is expected to be earnings per share accretive in the first full year of ownership and deliver a strong return on investment to Woolworths Group.The transaction is subject to an earn-out at the end of F22 and F23 if earnings growth materially exceeds the business plan. Put and call options have also been granted to the Smith family and Woolworths Group respectively over the Smith family’s remaining 35% shareholding, exercisable from the third anniversary of completion.

The transaction is subject to ACCC approval and the satisfaction of customary closing conditions with completion expected by the end of calendar year 2020. The purchase price will be funded from existing cash reserves and available debt facilities and is not expected to affect the Woolworths Group’s existing credit metrics.

Woolworths’ helping hand for community initiatives

The last 12 months has been one of the biggest on record for Woolworths’ support of vulnerable Australians, particularly for the many individuals, families and farmers impacted by drought, then bushfire, and more recently COVID-19.

“Supporting the communities in which we operate has always been part of Woolworths Group’s DNA. However, in the current crisis and during recent natural disasters, community takes on a much broader definition,” said Brad Banducci, Woolworths Group CEO.

“We have recently doubled down on our commitment to work together with partners like OzHarvest, Fareshare and Foodbank to provide food to Australians who need it most, while our eCommerce business has remained focused  on continuing to support vulnerable customers.”

Being part of almost every community in Australia means that store team members within Woolworths play an integral role in responding to immediate needs of their local community.

They provide the on-the-ground support for national community initiatives, particularly during times of disaster.

“Our store teams should be an integral part of their local community and are often directly impacted themselves by a disaster. They experience first hand what it is like on the ground, and this knowledge plays a key role in informing where our support should be directed in our national initiatives.

“It is about us listening to our team, customers and the community more broadly and uniting over the outcomes we all wish to support and achieving that through collaboration,” said Banducci.

The past year Woolworths and their major charity partners have been particularly busy.

Drought
The effects the ongoing drought has on the food industry are measurable in many ways, such as shortages of supplies and price fluctuations.
In 2018, what began as support at a local store level in regional stores in New South Wales and Queensland for communities impacted by drought, turned into Woolworths’ largest national fundraising appeal of the decade.

A combination of customer fundraising and corporate donations saw Woolworths raise over $8 million for Rural Aid, enabling them to deliver 37,231 tonnes of hay on 806 road trains to 3,233 farmers, as well two additional, full-time, on-the-ground counsellors.

Bushfires
In late 2019, with the drought worsening, bushfires were out of control, which saw businesses, homes, communities and habitat across multiple parts of the nation destroyed.

In response to the bushfires, Woolworths Bushfire Appeal in partnership with the Salvation Army was launched in November 2019 and raised over $5m.

When these bushfires hit, the Salvation Army sent in over 3,000 officers and volunteers to support the frontline emergency workers with hundreds of thousands of meals and light refreshments, many times teaming up with the local Woolworths store on the supply of goods and preparation of meals.

On New Year’s Eve and into early 2020, as the bushfires continued to devastate towns and communities, they also destroyed the habitats and food supplies of many vulnerable and endangered native species such as the Mountain Pygmy Possum, Brush-Tailed Rock Wallaby and Grey-Headed Flying Fox, which is so critical to pollination of many critical plant species.

New partnerships were borne out of the impacts the fires were having on wildlife in local communities.

“Our teams in the affected areas and our customers raised the alarm bells on what this loss of habitat could mean to the environment and asked for action to support the rescue and recovery of these animals,” said Simon Tracey, Woolworths community manager.
Woolworths began working with the NSW Government’s “Save our Species” program, to donate tonnes of fruits and vegetables directly into dozens of National Parks to feed these endangered species.

“We also extended our food rescue and recycling program to launch the ‘Woolworths Food for Wildlife Initiative’ with WIRES. This sees many of our stores donating surplus fresh food directly to the many local carers that nurturing these native animals back to health and returning them to new or old habitats as their naturally occurring food sources return,” added Tracey.

Woolworths earlier this year also expanded its S.T.A.N.D. (Support Through Australian Natural Disasters) program to incorporate four major partners – the Salvation Army, Rural Aid, Foodbank and Lifeline. Twenty cents from each sale of Woolworths Spring Water 24-pack and Woolworths Spring Water 10-litre pack is being donated to support the natural disaster work of these charities.

COVID-19
The initial spread of the coronavirus saw many people change their shopping behaviours and led to stockpiling of many essential products. At first it was toilet paper, but then the many key staple foods that Woolworths’ hunger relief partners rely on.

In March, Woolworths entered a new partnership with Meals on Wheels to supply toilet paper to help support their elderly and vulnerable clients across Australia.

“With the elderly being the  most vulnerable to the COVID-19 virus and being asked to self-isolate, this partnership allowed us to  work together with the entire  supply chain and replenishment team,” said Tracey.

Woolworths worked with dozens of local Meals on Wheels centres to distribute 320,000 rolls of toilet paper, which was two packs for almost every Meals on Wheels client in the country, across hundreds of towns and cities in urban, rural, regional and remote locations.

One of Woolworths key commitments is to addressing food insecurity and food waste.
“That is why we have a number of food relief partnerships, but it was our relationships and support of our three largest partners – OzHarvest, Foodbank and FareShare, that we immediately increased to support those in immediate need as a result of COVID,” said Tracey.

FareShare, who operate Australia’s two largest community kitchens in Melbourne and Brisbane, could not rely on its army of volunteers, so Woolworths Group stepped in to provide support with chefs from its shuttered ALH hotels business to work within the kitchens through April, May and June.

Woolworths’ national Fresh Food rescue partner, OzHarvest, likewise saw a fluctuation in food supply  and demand.

With an initial dip in available volumes of fresh food from donors, it then broke records with April being the largest volume of food they have ever rescued and distributed.

Foodbank, also saw an immediate impact on supply as the public stocked up on the many essential items such as rice, pasta, pasta sauce, tinned food and toiletries, that are always of the highest demand with the thousands of food relief charities they support.

“To assist our food relief partners without disrupting our stores during a period of increased product demand, we provided additional financial support to help them with their operating costs, then set up parallel supply chains, often purchasing food directly from our suppliers to donate directly to our partners.

“This operation ran from late March through to the end of June, with over $8 million of funds injected and many new and agile business solutions in place to support such needs in the future,” said Tracey.