Business Maverick

Business Maverick

New blood for Woolies

In 2015 Woolworths’ share price was R103.72. In early 2020 it was priced at R50.51. Eventually, someone has to take the fall for that scale of value destruction.

The board of fashion and food retailer Woolworths has announced that group CEO Ian Moir will resign his position effective 16 February 2020.

He will be replaced by Roy Bagattini, a South African who is currently president of the Americas for Levi Strauss, one of the world’s most iconic brands.

The US business is the largest in the Levi Strauss group and includes a significant network of retail stores, spanning the United States, Canada, Mexico, Brazil and Latin America.

Bagattini also played an instrumental role in the development and acceleration of the e-commerce and omnichannel capabilities of Levi Strauss.

He cut his teeth in the consumer market at SABMiller, which he joined in 1991, before becoming president for Asia and Africa at the Carlsberg Group, a position that was based in Hong Kong.

Outgoing CEO Ian Moir joined Woolworths in November 2010 when the share price was R28.30 and the firm ungeared. As of Tuesday 14 January, the share price was R51, but Woolies was saddled with debt of R12.5-billion and profit margins in all categories that had been declining since 2015.

Moir’s vision was for Woolworths to become the Southern Hemisphere retailer and he was instrumental in Woolworths’ acquisition of Australian retailer David Jones for R21.5-billion in 2015.

In September 2019, Moir assumed the role of acting CEO of David Jones and moved back to Australia. This was so that he could play a more hands-on role in the turnaround of David Jones.

This was despite shareholder calls for Moir’s head.

Shareholders had grown frustrated at the performance of the retailer, whose value had been written down in stages by a cumulative R11-billion, the last write-down announced in August 2019.

In the South African business the distracted group once again forgot that its core customer is not young and hip, but mature and fashion-conscious.

As a result of this neglect, as well as poor results from David Jones, headline earnings for the year to June 2019 fell by almost 5%.

The total dividend for the year was 190.5c, more than 20% lower than the previous financial year.

It appears this was too much for the board.

“Roy has extensive operational, management and turnaround experience in global consumer and retail markets, which will prove invaluable as we continue to navigate the structural changes taking place in the retail sector and the challenges particular to our group.”

He proffered thanks to Moir for his vision and energy in overseeing a period of growth and transformation in the company. BM


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