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Woolworths Australia CEO exit shows unit’s lack of stability

David Jones CEO, David Thomas resigned for personal reasons and a replacement will be announced in due course, Woolworths says.

Woolworths announced the departure of the third head of its David Jones business in five years, raising concerns that a recovery in the Australian unit may be hindered by a lack of stability at the division.

David Thomas resigned for personal reasons and a replacement will be announced in due course, the South African food and clothing retailer said in a statement on Thursday. Woolworths Chief Executive Officer Ian Moir “will work directly with the David Jones management team in the interim,” the Cape Town-based company said.

“The departure is very concerning” as Woolworths has pledged to turn the David Jones business around, said Atiyyah Vawda, an analyst at Avior Capital Markets Analyst, said by phone from Johannesburg. “There is an increasing gaping hole in terms of retail expertise across the group.”

Woolworths bought David Jones for $2 billion in 2014 as part of a strategy to create a southern hemisphere retail giant, but the move turned sour when a revaluation of the 180-year-old business led to a 2018 writedown of 712.5 million Australian dollars ($505 million). That contributed to the retailer’s first annual loss since at least 2002.

The troubles in Australia have been compounded by travails in Woolworths’ home market, where non-food sales have declined amid sluggish economic growth and weak consumer spending. The retailer said in August that its womenswear “failed to resonate” with customers.

The shares fell 1.7% to R48.61 as of 11:06 a.m. in Johannesburg. That extends the decline this year to 12%, compared with a 8.9% drop in the FTSE/JSE Africa General Retailers Index.

© 2019 Bloomberg L.P

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Shareholders can only hope that the new chairman has the courage to fire the CEO after a disastrous tenure

Paid too much for a business under stress and now the expectations to get the money back are too high.

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