Woolworths Chief Executive Officer Ian Moir said his critics have a point when they say he made a mistake with a $2 billion swoop for Australia’s David Jones chain five years ago — but insists the worst is over.
“They were right,” he said in an interview at the South African retailer’s headquarters in central Cape Town. “I regret the price, and buying it at that time — hindsight is a wonderful thing — but I think we have a great asset now.”
Moir, a 60-year-old Scot, acquired David Jones hoping to create a southern hemisphere-wide giant offering upmarket food and clothing. The move began to unravel through a string of changes — notably a head office move to Melbourne from Sydney that required about 75% of the workforce to be replaced.
Two writedowns of the business followed, most recently earlier this month. New IT systems, an online launch and a A$400 million ($270 million) refurbishment of a flagship store on Elizabeth Street in Sydney have caused further disruption.
“We should have done less over a longer period — but the benefit is we are pretty much through it now and in a better place as a business,” he said in his top floor office on Thursday. “We’ve got 20% still to go, but I do feel we are through the worst.”
Did he consider quitting? “Yes I did, but I thought it would be entirely irresponsible,” Moir said. “Falling on your sword is always the easy thing to do. I’m doing what I should do — taking responsibility for getting it right.”
Woolworths shares have slumped about 44% over the past four years, but Thursday brought a show of support from the market after the release of full-year results: A 3.6% gain, the most in seven weeks.
That’s less to do with David Jones than a strong performance in South Africa, where sales of Woolworths clothing improved in the second half after a botched move to younger, trendier lines a year ago. That required a return to basics and serving the group’s traditional, older customer, Moir said.
Meanwhile the food division outperformed the market for the 10th year in a row. David Jones sales continued to fall — down 0.8% for the year – though Moir said the completion of the Elizabeth Street store refurbishment in March should give that a boost.
© 2019 Bloomberg L.P.