Public

Woolworths (WOW) 2015 AGM Report

Company/ASX Code : Woolworths Limited (WOW)
Venue :
1pm Wesley Centre
220 Pitt St
Sydney, New South Wales
Monitor : Mr Allan Goldin
AGM Details / NoM : Thursday 26th November, 2015
# of Attendees : 523 shareholders plus 145 visitors
# Holdings represented by ASA : 2,234
Value of Proxies : $165 million
# Shares Represented by ASA : 6.8 million (equivalent to 8th largest shareholder)
Market Capitalisation : $30.5 billion

Learning from past mistakes and becoming a listening company

The new Chairman pre-empted shareholder disillusionment and media predictions of anger with his personable style, opening his remarks by acknowledging shareholder disappointment at the results. He assured shareholders that the board took full responsibility and lessons from the past; but now needed to urgently address the future, although disappointed the meeting by saying a new CEO could be months away.

Mr Cairns said there are no quick fixes, with an estimated a three-year timeframe for a full turnaround, which would see growth of 3% to 4% top line. Important cultural changes include changing from a knowing company a listening company. The supermarkets, which account for 70% of the business, need to be invigorated and made price competitive, with $300 million being invested in discounting prices.

With Bunnings having only a 20% market share, Mr Cairns said Masters needs to execute the right growth strategy into the fragmented market, but cannot continue to lose over $200 million a year.

Big W has half the profit of five years ago and is a poor value proposition, but with good leadership it can be made competitive.

The CEO confirmed that NPAT for 2016, expected to be between $900 million to $1 billion, is tracking on course.

Board renewal is underway and in response to ASA’s question, Mr Cairns said he would like one new director to be someone who has transformed a business.

Questions from the floor included loyal shareholders still going to Woolworths and Masters, but apart from a few happy supermarket customers in upmarket suburbs, the others dwelt on poor quality stores where customers deserved better; an OH&S issue with drifting mats ready for people to trip on; poor logistics — here, the Chairman commented he will employ an expert in this area very soon; and empty Masters stores with more staff than customers, and poor locations and market recognition. The question of ending plastic bags arose again — it seems only State regulation will get rid of them. Of course, the perplexing advertising and promotion campaigns of the last year didn’t go without comment.

ASA was part of the 99% in support of the directors’ elections, and although it voted for the Remuneration Report, almost 10% didn’t. The Chairman openly acknowledged to the meeting, that in consideration of the ASA vote for the resolution, he would conduct a wide-ranging review of remuneration before the next AGM, and the result would be in line with ASA’s guidelines.

This company is monitored by Allan Goldin and Kerrie Tarrant.