The job ahead for the new chairman of Woolworths - find a CEO

Gordon Cairns when he was CEO of Lion Nathan. Ross Land/Getty Images

The first job for the new chairman of Woolworths, Gordon Cairns, is to find someone to run the company and restore the fortunes of the once great supermarket.

Cairns takes over from departing chairman Ralph Waters, who had been in the job for more than four years, on Tuesday.

Facing him is a slump in profit, down 12.5% to $2.146 billion, for 2015 and little prospect of getting anywhere near improving sales for at least the next six months.

Cairns starts just in time to start interviewing for a replacement to CEO Grant O’Brien, who announced in June he was stepping down after what he called disappointing results.

A long list has already been shaved to a shorter list of candidates to be interviewed. It’s not known if there are any internal candidates but one possible option is Woolworths Food Group managing director Brad Banducci.

Any new CEO will have to deal with falling sales, increased competition and a perception that Woolworths is more expensive, although Woolworths says it has been matching Coles’ prices since the end of June.

In general, prices have been falling at both as the big supermarkets face increasing pressure from smaller players, including German group Aldi, which is aggressively pushing into the Australian eastern states market.

This is squeezing the once fat margins of both groups. Woolworths also has a major drag in its Masters home improvement business with losses running at $224.7 million last year.

The current chairman Ralph Waters, who says his own corporate life has just two days more to run, is taking some responsibility.

Waters says there are two people who carry the responsibility for disappointing the market, the CEO and the chairman.

“So I will put my hand up for the share of the responsibility,” he says. “I think it is crystal clear that at this stage a good circuit breaker for all, and the market’s view of it, is that we have some board renewal.

“That’s what’s driven my decision. The timing of now is vital so that the incoming chairman can … run the whole CEO selection process.

“No time has been wasted. Gordon will hit the ground with a flying start on the search process. He can live with the choice he and his colleagues make.”

Cairns is very much a member of Australia top-of-the-town non-executive director brigade.

He has extensive retail and consumer goods experience as a former CEO of beverage group Lion Nathan as well as having held senior marketing, operations and finance roles at PepsiCo, Cadbury and Nestlé.

He is also currently chairman of Origin Energy and Quick Service Restaurant Group — Red Rooster, Chicken Treat, and Oporto — and a director of Macquarie Bank. He’s also been chairman of David Jones and Rebel Group, and a director at Westpac.

“The most immediate issue is to identify new leadership to take the business forward,” Cairns says. “The CEO search process has been under way since June and is progressing well.”

Carins is also known for his strong support to get more women in senior management roles in Australia and thinks the number of women who are directors of ASX 200 companies — 19.3% — is appalling.

“The rate of change is actually atrophying,” he told a business event this month. “The progress is glacial and the rate of change is slowing down.”

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