Struggling Woolworths shares fall after two more directors leave
By Larry Claasen - Feb 12th, 11:20
Struggling retailer Woolworths saw its share price decline to the lowest level since 2012 after saying two nonexecutive board members with extensive business experience in Australia resigned with immediate effect on Monday.
The resignation of two Australia finance experts, Patrick Allaway and Gail Kelly, the South African-born former CEO of Westpac bank, followed that of David Jones CEO David Thomas, who left with immediate effect last week.
Thomas was the third CEO to leave David Jones in five years.
Woolworths bought David Jones in a much-praised takeover for R21bn in April 2014 as part of its strategy to create the largest retailer in the southern hemisphere.
Battling to turn around the business, the retailer wrote down the value of the Australian retailer by R7bn in 2018, leading Woolworths to report its first annual loss since 2002.
The share price is down 28.8% over the past year, lagging both the JSE’s general retailers and all share indices.
It closed down 3.29% on Monday at R45.80, a far cry from its post-David Jones acquisition peak of R106.88 in 2015.
The resignations of Kelly and Allaway come just a few months after both stood for re-election as Woolworths' board members at its annual general meeting in (AGM) November, with Kelly gaining 91.72% and Allaway 91.79% shareholder support.
They were also directors of David Jones, with Allaway chairing the Australian chain’s audit, risk and remuneration committees. They gave no reason for their departures, while Woolworths said it did not comment on "board deliberations".
Independent retail analyst Syd Vianello said it was very troubling that three high ranking people in the group had left without giving explanations for their departures.
"The sudden departures of three directors with Australian roots was enough for me to believe that it has to do with David Jones," said Gryphon research analyst and portfolio manager Casparus Treurnicht.
He said he initially did not think Woolworths would consider selling David Jones, especially since it overpaid for it, but now such a move looked increasingly likely.
The rapid departure of senior leadership after it became apparent that the acquisition was not working out, was usually a sign that the company was about to go through a major restructuring or even see it sold off. They opted to leave because they did not agree with the new direction for the company, Treurnicht said.
Woolworths said at the November AGM that disposing of the group was not on the cards and that it was committed to turning it around.
At the time, long-serving chair Simon Susman also expressed full confidence in CEO Ian Moir.
The company said on Monday that it had the skills to run and oversee its Australian operations. "The board has significant complementary expertise across many international markets."
"Ian Moir also has a deep Australian retail experience. We are in the process of succession planning and will appoint new directors based on specific experience in relevant markets."
Kelly, a former Nedbank employee who went on to become CEO of Australia’s St George Bank from 2002 to 2007 and then headed the larger Westpac banking group from 2008 to 2015, joined Woolworths as a director in 2015.
Allaway joined the Woolworths board in 2014.Business Live
Ackermans launches ‘Moms4Moms’ educational platform to give mothers a helping hand
16/09/2019 - 14:03
According to a 2017 Statistic South Africa report, 61% of South African children are raised by only their mothers. This reveals that the majority of South African women have to navigate single-parenthood, as well as being the sole provider for their families.
Rhodes Food Group's turnover rises amid healthy international growth
16/09/2019 - 11:14
The international turnover of Rhodes Food Group, which makes Bull Brand corned meat and Bisto gravies, rose 13.4% in the 10 months to end-July, boosted by a weaker rand and exports of fruit snacks to the US.
The changing UX and CX landscape
13/09/2019 - 16:16
An exceptional customer experience (CX) builds a foundation of loyalty and trust. Similarly, a positive user experience (UX) encourages brand connections with people wanting to come back for more. And yet, local organisations must learn to embrace these more effectively to differentiate themselves from their competitors.
The role of the stokvel in the organisation
13/09/2019 - 10:14
South Africans are well-known for their participation in stokvel saving schemes where members contribute a fixed monthly amount that is paid out to a specific member on a specified date. Nicol Myburgh, Head of the HR Business Unit at CRS Technologies, says employers can integrate these payments into existing processes to make it safer and more convenient for those members.
Improving your restaurant's ambience with these 5 tips
13/09/2019 - 09:44
Owning a restaurant is much more than ensuring that your guests are well-fed. It is about the experience you offer your customers. For instance, have you ever been to a restaurant where everything is just right? And by everything, we mean the decor, lighting, food, and music. This is the first impression you should aim to achieve as a restaurant owner.