Since profit downgrades yesterday, Woolworths has attracted criticism from industry heads arguing the retailer is no longer the market leader it used to be.
Donald Williams of Platypus Asset Management even went as far as to say that the supermarket had “lost their mojo”.
“Woolworths used to be the leading business in the category and that’s just not the case any more.”
But Woolworths CEO Grant O’Brien is standing tall despite the negativity surrounding result and has told The Weekend Australian it is part of a long-term plan.
“The steps we are taking today are… designed to make sure that we are long-term growth and remain a blue chip stock,” he said.
“It’s not the first time… Woolworths has had a downgrade, but certainly not something you plan to have in your plan.”
While not pleased with the sales results, O’Brien said the $500 million investment in cutting prices and improving staffing at its stores would will make the business more “competitive” and “cheaper”.
“We should have market-leading prices, market-leading stores and market-leading service, and these investments will make sure that’s the case.”
Yesterday Woolworths reported a 3.1% fall in profit to $1.28 billion.
The downgrade, as well as mounting losses at other parts of the Woolworths business, sent shares down nearly 10%, losing $3.24 to $30.71 at close. Read more on that here.
Despite his optimism, some believe O’Brien’s 25-year career with Woolworths, starting as an accountant in Purity Supermarkets in Tasmania before being appointed managing director and then CEO in 2011, has run its course.
Coles has beaten Woolies in same-store sales for the last 21 quarters, and only now has O’Brien turned from a lifting prices and cutting costs strategy to a cutting prices and increasing service levels strategy, which many agree is too little, too late.
The Weekend Australian has more.
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