2015 was an terrible year for Woolworths shareholders.
The stock price lost $6.18 (20%) with a close last Thursday at $24.50. That’s a 37% drop from the April 2014 high of $38.92 and things could have been much worse with the 2015 low of $22.41 in mid-December the weakest price since December 2006.
Shareholders will be thankful for the year-end recovery.
The weakness in the stock price is a reflection of the market’s view that Woolworths has multiple problems in its supermarket battle with Coles, its Masters hardware stores, Big W discount chain and, crucially, management at head office.
Having already brought back former CEO Roger Corbett as an adviser, new Woolworths chairman Gordon Cairns has some tough decisions to make about these businesses and the appointment of the new CEO in the year ahead.
But it might not be all bad news, according Bank of America Merrill Lynch analyst David Errington.
The AFR reports this morning that Errington said in a note recently that: “Woolworths has a number of underperforming assets, which to fix are within the company’s control. Some of the fixes may be unpalatable or unconventional but large gains in shareholder value are available to Woolworths if it takes certain actions.”
As long as they pull the right levers, that is.