Three ‘urgent’ priorities for Woolworths

Woolworths’ chairman Gordon Cairns outlined three urgent priorities that the supermarket group needs to address in order to boost profits, at the company’s annual general meeting in Sydney.

Cairns branded Australia’s largest supermarket group profits “unacceptable” at the meeting.

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He also reminded investors that the group’s supermarkets are responsible for 70 per cent of profits, therefore making it the key area needed for reinvigoration.

Supermarkets, the Masters hardware division and Big W discount division were highlighted.

Supermarket business

The chairman said that Woolworths had begun change in the supermarket section of the business by investing over $300 million in price reductions to date, has improved the service level in stores by adding staff and ensuring availability, and are upgrading stores.

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“Customers who abandoned us because we were uncompetitive will not suddenly switch back, and laying down our future pathway will not happen overnight,” Cairns said in an ASX statement.

Masters hardware division

Cairns identified the growing home improvement market as another area of focus for the group’s Masters hardware division.

He said that the group had identified Master’s competitive advantage but its execution had let them down and that the business cannot continue losing over $200 million each year.

“When I joined I said I had an open mind on Masters, and that the board would be informed by the numbers from the five year plan and our options from that. That is what we as a board are working on,” said Cairns.

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Big W Discounts division

Making half the profit it was five years ago, the Big W Discount division needs to be improved to keep up with the rapidly changing and highly competitive sector.

While Cairns admits that the group hasn’t helped itself with its value proposition, IT execution issues and a lack of leadership, he added that with good leadership in place there is a clear path to improve returns.