Woolworths Limited (ASX:WOW) announced this morning that chief executive Grant O’Brien will retire and the search for a new CEO has commenced.
In an announcement to the ASX the supermarket giant Woolworths informed shareholders that CEO and Managing Director Grant O’Brien will retire after four years in the job. Grant O Brien said; “At the recent Investor Day we set out clear strategies to grow our business over the next three years and we have been working hard to execute these plans. However, the recent performance has been disappointing and below expectations. I believe it is in the best interests of the Company for new leadership to see these plans to fruition.“ Woolworths has now commenced the search for the new CEO as the company will look both internally and externally for a suitable candidate.
WOW also provided a trading update which shows that the company is on track with its cost savings across the current as well as the upcoming financial year. The company believes it is at the most competitive position since January 2014.
Whilst the February guidance will most likely not be met, Woolworths recorded 19.8% growth in its Home Improvement division commonly knows as ‘Masters’. One-off significant items will impact this year’s financial performance while net profit before significant items is expected to be broadly in line with the prior year.
The announced management changes should give investor sentiment a boost as a fresh start could help Woolworths to successfully execute the transformation to become a more competitive peer in light of ever increasing competition. While German discount retailer Aldi continuous to push in the market space, another German low cost retailer called Lidl plans to take on Australia later this year. Lidl has recently been named Grocer of the Year at the Grocer’s Gold Awards in London and it will provide another shopping opportunity for bargain hunters.
Overall the developments are positive for Australia as it increases the competition amongst grocers. As we have recently seen Coles (ASX:WES) and Woolworths can no longer ‘dominate’ the prices by doing little to nothing to retain clients as additional effort will be required to maintain a leading position.
Author: Simon Herrmann
Jun 17, 2015
Simon is a financial analyst at independent research firm Wise-owl who wants to change the world by disrupting the cliché approach to investment decision making with convergent thinking. Wise-owl’s goal is plain and simple: Find the best opportunities for our members by following a proven methodology and to create long-term value through high-quality advice, innovation, technology and education. We combine industry experience and the agile mentality of a start-up. Wise-owl is the future of stock market investing.