Woolworths CEO moves to Australia to sort out David Jones crisis

Ian Moir (Supplied)
Ian Moir (Supplied)

The board of Woolworths has requested that the group CEO Ian Moir, spend significantly more time in Australia. The aim is for him to oversee the turnaround of the group's David Jones business in the capacity of acting CEO.

Moir will now be primarily based in Australia, Woolworths told Fin24 on Thursday afternoon. Moir will be in Australia for as long as it takes to turn the business around and to find a successor for the David Jones CEO role.

His group responsibilities will, however, continue.

Fin24 reported earlier on Thursday on Woolworths' results for the financial year ended June 30, 2019. Woolworths reported a 4% increase in turnover to R78bn for the financial year. Its headline earnings fell by almost 5%, mainly due to the impact of David Jones operations.

The total dividend for the year is 190.5c - more than 20% lower than the previous financial year.

'We forgot our core customers'

Moir told Fin24 that the pick-up in demand in the clothing business of Woolworths SA had been due to an adjustment to its approach.

"For about 18 months or two years we got our clothing business wrong. We went for a target market that was too young and forgot our core customers," he explained.

"We are now back to offering our core customers beautiful basics, better value and more choice. And we have had a good response to that."

Furthermore, the beauty business performed well for two years now after the company managed to get in the big brands too.

The retailer has had to operate in a tough economic climate - both in South Africa as well as Australia. Moir said consumer spending is constrained in both markets.

"People are more considered and selective in purchasing clothes. That is why we do well with basics," he added.

Health-conscious customers

Moir is also happy with the food business trading well, growing market share. A general trend seen here is growth in the demand for health-type products.

"There is a move away from carbohydrate-based food, for instance. Customers seem to be more health and allergen conscious," he said.

"Many people are also looking for convenience. This is not just about the location of a shop, but about the convenience of pre-prepared meals or cooking packs to make their lives easier and giving them new ideas."

As for the Australian business, Moir said the refurbishment of the flagship David Jones store in Sydney will be fully completed in March next year. In the meantime, certain sections of the store have opened already.

"The full opening of the flagship store will make a difference of A$42m to the bottom line as we had to pay rent while refurbishing the store," he said.

As for the online business, Moir said it is growing significantly and there is no real difference between what customers choose to buy online and what they come in-store for.

Going forward, he said in SA consumer spending is expected to remain constrained.

"In Australia we remain focused on the turn-around of David Jones and in SA we foresee good momentum with the turnaround of the clothing business and the food business will continue to go from strength to strength," he said.

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