Woolworths O'Brien to step down

DANIEL PALMER
JUNE 17, 2015
The Australian
Woolworths chief executive Grant O’Brien has today declared his intention to step down, paving the way for a global search for his replacement.
Mr O’Brien’s retirement from the company comes almost four years at the helm, after he took the reins in October 2011, and follows a number of disappointing sales results from the giant retailer. It also coincides with a profit downgrade for the current financial year that will result in earnings broadly in line with last year’s number.
“Woolworths is family to me and I have been honoured to work alongside our team of 200,000 hard-working, talented people for the past 28 years,” he said in a statement.
Mr O’Brien will remain in the CEO role while the search for his replacement proceeds, with the retailer saying both internal and external candidates would be assessed amid the hunt for a new leader.
The current chief of Australia’s largest supermarket operator indicated the move was impacted by recent sales results, labeling this year’s performance “disappointing”.
“At the recent Investor Day we set out clear strategies to grow our businesses over the next three years and we have been working hard to execute these plans,” he said.
“However, the recent performance has been disappointing and below expectations.
“I believe it is in the best interests of the company for new leadership to see these plans to fruition.”
Mr O’Brien added that the move was made after discussions with Woolworths chairman Ralph Waters.
“I approached the chairman and expressed to him that I am committed to a smooth transition to a new CEO and wanted to give the board sufficient time to consider its options,” he said.
Guidance downgrade
Amid a series of disclosures from the ASX-listed heavyweight, the retailer also declared it would fall short of forecasts for profit in the 2015 financial year.
Woolworths had been anticipating profit growth of 1.8 per cent, but is now expecting a flat result on the back of weaker-than-expected sales and rising investment in its grocery division aimed at lowering prices and improving service.
“Woolworths now expects to deliver FY15 net profit after tax before significant Items broadly in line with the prior year, which was $2.45 billion,” the company said in a statement.
“Including the impact of significant items, we expect FY15 net profit after tax to be approximately $2.15 billion.
“As previously stated, we will not be providing any further guidance on profit growth moving forward.”
The news follows a disappointing half-year update in February when the retailer adjusted its profit forecast to 1.8 per cent, which was at the lower end of consensus forecasts.