Woolworths will stop issuing guidance on profit results after badly missing the numbers for the current financial year.
Chairman Ralph Waters, briefing analysts following the announcement that CEO Grant O’Brien is stepping down, said of the profit expectations for the current year:
“We’ve just got to look back and say that management and board we got that wrong. It was the best view of the business at the time but it is also why we’ve henceforth decided we will not give guidance in the future.”
Woolworths is now forecasting a full year profit flat against last year’s $2.45 billion. In February, the supermarket group was still expecting 1.8% growth.
Waters said the board of directors had accepted the guidance given by the CEO and management.
However, he now regretted that because it meant the management team was hamstrung, focusing on numbers as December and January brought bad news on sales.
“We took management advice and we tested the guidance at the time with the downsides that management put to us,” he said.
“And we felt comfortable on their recommendation that the guidance could be achieved.
“The main reason that we regret that guidance was that it constrained management through December and January when they needed flexibility.”
Waters indicate that dividends would continue to be declared. “I don’t think we’re at a stage where we are under pressure to reduce the dividend,” he said.
During the analyst briefing, Waters faced questions on whether the board took responsibility for the poor profit forecast and whether he felt he should step down.
The chairman said he had been advised that further change at Woolworths would not be good for the company at this time.
Woolworths shares rallied on the CEO stepping down. They were trading up more than 2%. Late in the day, the shares at $27.42, down about 0.08%