Woolworths has said that Grant O’Brien will retire as chief executive officer after less than four years at the helm, as Australia’s largest supermarket chain struggles with competition from discount rivals.
O’Brien, 53, will remain in the role until the company finds a successor, Sydney-based Woolworths said in a statement. The company also cut its full-year profit forecast and said that it would fire 1,200 workers.
O’Brien, who began work at Woolworths in his twenties as a shelf-stacker, had pledged to restore profit growth that ran at more than 10 per cent annually for a decade. Acknowledging that recent performance had been “disappointing”, he said that net profit will fall 12 per cent in the current fiscal year – the second drop under O’Brien after 12 years of unbroken growth to 2011.
“Woolworths was king of the supermarket business in an expanding economy while competition was unfathomably low,” said Jeremy Hook, who helps manage about A$350 million including Woolworths shares as investment director of TMS Capital Pty. in Sydney. “It’s probably a good thing he’s going. The market’s been baying for blood, and the record under his watch is poor.”
With a combined market share of more than 78 per cent, Woolworths and Wesfarmers, which owns its main rival Coles, have become two of the top seven retailers globally by net profits. That’s under threat from German discounter Aldi, which has doubled sales in the country since 2008 and could repeat that by 2019, according to UBS Group AG.
“We set out clear strategies to grow our businesses over the next three years, and we have been working hard to execute these plans,” O’Brien said in the statement. “However, the recent performance has been disappointing and below expectations.”
Net profit in the full fiscal year will fall to about A$2.15 billion from A$2.45 billion last year, as a result of discounting its products and investing in stores to win back customers, Woolworths said. The company will take one-time costs of about A$270 million to pay for about 1,200 redundancies, changes to business practices and selling property assets at a loss.
News by Bloomberg, edited by ESM
