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 newsletter!

Error: Please check your email address.
Show Comments

Blog Posts

Creating the ultimate customer-centric environment in 2018

All businesses today that are serious about being successful have adopted a customer-centric environment.

Katja Forbes

Founder and chief, sfyte

Embrace customer obsession to transform marketing into a catalyst for growth

In 2018, Forrester believes 20 per cent of CEOs globally will fail to act on digital transformation and put their firms at risk.

Michael Barnes

VP research director, Forrester

How challenger brands can win at biddable media

Challenger brands, especially in highly competitive markets, generally can’t match established players for media spend.

Chris Pittham

Managing director, Jaywing

While a lot has been said about AI and machine learning, I don't see it put to extensive use as yet. I will be happy to have it help the ...

Atul Dhakappa

Predictions: 8 digital marketing trends for 2018

Read more

Wowww! What A Awsome Blog! Thanks for this wonderful post I really got many valuable information through it. As a learner it's not so eas...

Mia Joseph

Predictions: 8 digital marketing trends for 2018

Read more

What you have said about AI, machine learning and voice activation is very true. Some of the other things we are already observing is the...

Atul Dhakappa

Predictions: 8 digital marketing trends for 2018

Read more

Yes, Digital Marketing now getting growth at the higher level. we can't predict today trends in the digital world. Nice stuff! Thanks for...

lorenso

Predictions: 8 digital marketing trends for 2018

Read more

I believe Digital Marketing is moving more toward social media and influential marketing. People are trying to grow their influence as in...

Rachel Kieran

Predictions: 8 digital marketing trends for 2018

Read more

Latest Podcast

More podcasts

Sign in