“Down, down, prices are down” is the slogan Coles supermarkets used to describe its competitive pricing strategy as it chased down market leader Woolworths, but it could equally be the slogan to describe Woolworth’s own business and recent share price.
Yesterday, new Woolworths chair Gordon Cairns apologised to shareholders for the recent crash in the business.
“The results for 2015 were frankly unacceptable, and the disappointing share price performance has reflected this,” Cairns said, adding it was “time to move on, as we cannot change the past, but we must learn from it, and urgently address the future.”
But Scott Schuberg, CEO of Rivkin Securities, wasn’t impressed with his apology and believes there are still issues at the firm.
In a note to clients this morning Schuberg wrote a very foreceful takedown of the chairman, current board and the management strategy.
Here’s what he said:
WOW held its AGM yesterday and there was nothing particularly reassuring that came out of the mouth of Chairman Gordon Cairns. Its inability to find a new CEO is disconcerting and bringing back Roger Corbett as an advisor highlights that the company’s board has really run out of ideas about how to run this group of businesses. They’re keeping on CEO Grant O’Brien, who resigned in June, because they can’t find anyone else to run it.
Nothing definitive was announced with regard to its path to dumping/divesting/driving the Masters hardware disaster so I’m not sure WOW shareholders have anything to look forward to in the short term, apart from finding a private equity consortium to break the company up and have its brands run by a board of directors who can control its destiny.
To keep a CEO on with no incentive structures and proudly tell shareholders that they’ve cleverly negotiated to have him simply work out his holiday pay, as though its a demonstration of fiscal prudence, is ludicrous. Who care’s what the CEO is earning when Masters is losing $200 million a year!
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