Woolies CEO Ian Moir on tackling the problems Down Under
CEO Moir plans to spend most of his time Down Under
● Woolworths CEO Ian Moir’s move to spend the bulk of his time in Australia is not to tart up the David Jones business with the ultimate aim to sell.
Woolworths is committed to getting the business “good and profitable”, and the company is in it for the long haul, he says.
The Australian department store chain it bought in 2014 for R21bn has been a drag on Woolworths’ performance. The retailer has had to take several large impairments on David Jones, which means it now thinks it to be worth nearly R12bn less than when it initially invested.
Moir, himself an Australian, who has been at the helm of Woolworths since 2010, freely admits that he underestimated how much needed to be done at David Jones. Similar store formats in SA have gone extinct, with Stuttafords the most recent example.
Moir now reckons he could spend as much as 80% of his time in Australia, where he is standing in as CEO of David Jones on top of his responsibilities as group CEO.
“That is where the burning platform is,” Moir told Business Times this week.
Old Mutual Equities analyst Meryl Pick said: “It is a good tactical move because there are several key projects to execute and a lot invested in the business.”
But another analyst, who did not want to be named, said it was naïve to think Moir would be able to fix the Australian business at such a tough time. “It is quite interesting since he was behind the David Jones acquisition which was a total failure.”
This week Woolworths reported a 1% drop in headline earnings per share to 343c for the year to end-June. A recovery in its fashion, beauty and home business in SA and an acceleration in food sales in the second half of the year buoyed profits, but David Jones clocked a slight drop in sales.
“I spend my time where I need to spend it,” says Moir, adding that two years ago, he spent 80% of his time on the South African clothing business, where Woolworths had made a few bad moves that affected performance. “We tried to go too young,” he says, and the result was that the retailer missed out on the dependable spending of its core customers, especially in women’s clothing.
In men’s clothing, Woolworths has also gone back to basics, says Moir. And in children’s clothing it is hoping to attract parents who want durability more than low prices.
Though Moir hopes to take some of these lessons to Australia, he is facing other obstacles Down Under. “We’ve had two years of incredible disruption.”
As part of a cost-saving exercise, the company moved David Jones’s head office from Sydney to Melbourne and lost more staff, who did not want to relocate, than expected.
And it was clear from the start that the retailer’s systems had to be overhauled.
“We always knew it had to be transformed,” says Moir, but added that this also proved more difficult than initially thought.
Rejigging its flagship department store in Sydney took longer than planned and weighed on sales in the past year.
The group as a whole still fits Moir’s dream of creating a fashion retail giant in the southern hemisphere. Apart from sharing knowledge across platforms, he is also seeing the benefits of sourcing goods together, whether from manufacturers or when talking to giants such as online retailer Amazon.
But to grow profits in SA, which is still Woolworths’ mainstay, will be tough.
“One can never be insulated against the economy when your customers’ disposable income is affected by the downturn. Historically, we lose market share when people trade down in tough conditions.”
The SA business contributed nearly R4bn to operating profit, David Jones was responsible for less than R400m and Country Road chipped in R1bn.
That is where the burning platform is Ian Moir
Woolworths CEO