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Woolworths’ CEO resigns

After less than four years at the helm, Woolworths’ Chief Executive Officer and Managing Director, Grant O’Brien, will retire from the company.

The news comes weeks after a plan was revealed to reinvest $500 million in “cost savings” across FY16 and FY16 into lower prices, service and an “enhanced offer for customers.”

O’Brien said; “at the recent Investor Day we set out clear strategies to grow our businesses over the next three years and we have been working hard to execute these plans. However, the recent performance has been disappointing and below expectations. I believe it is in the best interests of the Company for new leadership to see these plans to fruition.

“I approached the Chairman and expressed to him that I am committed to a smooth transition to a new CEO and wanted to give the Board sufficient time to consider its options.”

A global executive search process including external and internal candidates will be conducted by the Woolworths Board to appoint a new CEO. O’Brien will continue to serve as CEO and Managing Director during this period.

Q3’15 has been tough for Woolworths, with the Australian Food and Liquor sales performance in April “disappointing.” There has been no improvement in May and June to date, with Australian Food and Liquor recording a decline in Easter adjusted comparable sales of approximately 0.7 per cent for Q4’15 to date.

The supermarket ran into issues with the introduction of a new merchandising system, which occurred during Q4’15. The launch of the new system created stock availability issues, which then impacted sales. As a result, General Merchandise Easter adjusted comparable sales for Q4’15 to date declined by approximately 12.1 per cent. The merchandising system implementation issues are in the process of being resolved.

Home Improvement Easter adjusted sales increased by approximately 19.8 per cent for Q4’15 to date with Home Timber and Hardware reporting growth of 21.9 per cent and Masters reporting growth of 17.7 per cent.

Woolworths now anticipates a total reduction of approximately 1,200 roles across support functions, supply chain and non-customer facing store positions (including those relating to the new distribution centre and meat processing facility announced last week). This is including plans to reduce 400 support roles announced at the Investor Day in May.

Trading performance for our other divisions is broadly in line with Woolworths’ expectations.

“We have been very transparent about the key challenges and opportunities for growth for each of our businesses, including setting out detailed plans at our recent Investor Day to win back sales momentum within our Australian Food business,” O’Brien said.

“Australian Food is on a three year journey to get customers to put us first consistently and our sales results will be volatile in the short term. It will take time for the improvements we have made to convert into sales momentum,” he said.

Woolworths Director of Group Retail Services, Penny Winn, will also depart the company to pursue a career as a Non-Executive Director.  Winn will remain with Woolworths until November 2015. It is expected that her position will be taken up by an internal candidate. 

 

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