CFO World

Target MD resigns amid accounting probe

Stuart Machin resigns from Wesfarmers after the ASX-listed group announces it is investigating claims of accounting issues in its last half year

Target Australia’s managing director, Stuart Machin, has resigned from the embattled retailer with immediate effect following the emergence of accounting issues in its last half-year results.

The news also comes a month after parent company, Wesfarmers, announced a restructure of the business that brought both Target and Kmart united under one department stores division and saw Kmart’s acclaimed CEO, Guy Russo, appointed at the helm.

In a statement to the ASX, Machin said he had decided to resign after eight years with Coles and then Target.

“During my tenure at Target, although the financial results were frustratingly disappointing, I feel we made enormous progress in reshaping a very troubled business,” he said.

“Latterly, I have been dismayed to learn of the accounting issues at the half year. I was not aware of these, but they happened on my watch and as managing director I accept my share of the responsibility. The right thing is now for me to move on.”

Reports emerged last week in the Australian Financial Review that Wesfarmers is investigating deals with about 30 overseas suppliers, which helped boost Target’s earnings by about US$12 million, or 25 per cent, in the six months to December 2015.

According to that article, the suppliers are understood to have agreed to give Target additional rebates in return for a guarantee of higher prices before the end of the financial year.

Wesfarmers also confirmed concerns were raised regarding Target’s accounting for commercial income as at 31 December 2015, and the group said it has acted promptly to launch a comprehensive investigation.

The outcome is expected to be finalised shortly.

Wesfarmers managing director, Richard Goyder, said he had accepted Machin’s resignation.

“Stuart made a substantial contribution to the turnaround of Coles as operations director and put great effort into working to rebuild Target. Consistent with my experience of working with Stuart, he has co-operated well with the investigation,” he said.