Woolworths' new CEO pitches innovation and customer focus as supermarket posts $972.7m loss

Embattled supermarket giant reveals massive losses in half-year financial results, prompted by decision to exit the home improvement space

Bringing the spirit of innovation back into the Woolworths Group and honing the embattled supermarket giant’s customer focus are key priorities for its new group CEO, who was announced today.

But judging from the group’s latest $972.7 million half-year loss, recent brand challenges and rising competition in the supermarket space from international and local rivals, the group’s entire leadership team has a tough job on its hands.

Woolworths has promoted managing director of the Woolworths Food Group, Brad Banducci, to CEO and MD of the group, effective immediately.He also continues in his MD post for the food division until a replacement is found.

Banducci takes the reins from former CEO, Grant O’Brien, who announced plans to retire in June last year and is relieved of his chief duties, effective immediately. O’Brien remains on the books as an employee until 1 August 2016.

Banducci has 25 years’ experience in retail, and has been with Woolworths for the last five years. He was promoted to head up the food group 12 months ago after working as MD for the Woolworths Liquor Group.

“I am a true believer in the potential of Woolworths and I am excited about our future,” Banducci said. “We are at our best when we are innovative and focused on the customer and winning their trust.

“I am an entrepreneur at heart, and a retailer by discipline, and I want us to take our company back to its best levels of performance. My goal as CEO will be to recapture the spirit of innovation and customer focus right across the business, and to grow a culture where our people once again feel a strong ownership of the business.”

Woolworths chairman, Gordon Cairns, said settling the top leadership job was a key priority when he came on as chairman.

“We undertook a rigorous international search process to find the best person to rebuild the Woolworths business and return it to sustainable growth,” he said in a statement. “While there were several strong candidates, the board was unanimous that Brad was the strongest of the field.”

Alongside the group CEO appointment, Woolworths reported its latest half-yearly financial results today, announcing a 176 per cent drop in net loss after tax of $972.7m. Total sales were down 1.4 per cent to $32bn, while net profit also dropped 33.1 per cent to $925.8m.

Contributing to the poor results were general merchandise, which saw a 3.9 per cent decline in sales to $2.27bn and an EBIT drop of 38.7 per cent, and home improvement, which reported a 21.1 per cent drop in EBIT to a loss of $125m. Petrol sales were also down by 23.8 per cent to $2.5bn.

Business units that actually improved year-on-year were food and liquor, which reported a 0.7 per cent increase in sales to $22.34bn in Australia, New Zealand supermarkets, which saw sales rise by 4 per cent to $3.17bn, and hotels, which reported a 2.6 per cent increase in sales to $802m.

“We are rebuilding the Woolworths business. While we have made progress, it will be a three to five-year journey and there is much to do,” Cairns said in response to the financial results.

Key priorities outlined by Cairns include reinvestment into supermarkets business and into improving the customer experience through better pricing, product lines and in-store service, and refocusing on core business lines by exiting the home improvement space, a decision that will cost about $1.9bn.

On the leadership front, Cairns said he’s also working to improve Woolworths’ executive might through Banducci and new Big W CEO, Sally Macdonald, and kicked off a board renewal that has seen former Best & Less CEO, Holly Kramer, join as an independent director.

“The final priority is to embrace a listening culture,” Cairns said. “This transformation is fundamental and will ensure that the strategies and programs we implement will enhance value for our shareholders.”

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+: google.com/+CmoAu

Join the CMO newsletter!

Error: Please check your email address.
Show Comments

Supporting Association

Blog Posts

Tapping behavioural science for consumer influence

We know full well the business we’re in as marketers is really the business of choice. But recent discoveries from behavioural science are leading to a psychological revolution that challenges many of the accepted models of how communication, creativity and advertising influence a consumer’s preferences.

Kyle Ross

Account director, TRP

10 ways of changing your culture through self-awareness

Did you hear about the manager who always shot the messenger whenever they brought bad news? He eventually stopped hearing bad news. Unfortunately for him, this wasn’t because there was none to report.

Steve Glaveski

Co-founder, Collective Campus

How to create a compelling customer experience vision

Organisations are seeking new ways to engage customers, drive new sales and increase customer satisfaction by providing engaging customer experiences. A customer experience initiative that lacks a strong, clear vision often fails to achieve its intended result.

Olive Huang

Research director, Gartner

Agreed. I see the opposite problem quite often where people are tasked in an organisation just with "be creative" - thus offering no boun...

Dr Fiona Kerr

The great debate: Is data killing creativity?

Read more

By far, this is the best article I've come across so far that has a relevant information regarding the future of marketing. Although the ...

Jayden Chu

​Six ways to prepare for the future of digital marketing

Read more

These are some good ideas. You didn't touch on the overarching goals and results of brand loyalty. This article does a good job at provid...

hgsupport

Four ways to use social media to boost customer loyalty

Read more

This read like a PR PLUG for the agency. Very flowery language for the agency and very little details about the deal or the project.

Digital_Marketer

Why Tourism Victoria decided to go agile

Read more

This is a rather useful article! This prediction made in the digital marketing trend is very important to improve the service that the ag...

Adam Way

Digital marketing predictions – Part 2: Getting the strategy right

Read more

Latest Podcast

More podcasts

Sign in