No one wants to say Woolies has a R21bn write-off, but ...
Third CEO in four years abandons his post at troubled Aussie retail chain David Jones, and the rot is still there
It was hardly surprising that Thursday’s announcement by Woolworths had a chilling effect on investor sentiment. The retailer said David Thomas, CEO of its Australian folly David Jones, had resigned for personal reasons. Thomas was tasked with stopping the rot at the Australian department store chain. In that role he led the incredibly extravagant A$200m refurbishment of the retailer’s flagship store in Elizabeth Street in the heart of Sydney.
Remarkably, the A$200m was being spent in a bid to spare Woolworths from further write-offs of its R21bn investment. Just 12 months ago the group announced it was writing off a third of that investment.
Thursday’s announcement may have prompted some shareholders to recall comments by the chairman at the AGM in November that there was no certainty there would not be further write-offs.
Thomas was at the helm for only two years. The new CEO, who has yet to be appointed, will be the fourth since Woolworths acquired the troubled Australian business in 2014.
The problem for Woolworths is that a lot of South Africans who have family in Australia visit David Jones stores during the year-end holiday and then return to recount their holiday stories.
One, who happens to be an international retail expert, reckons the A$200m is a case of “good money after bad”. He said that while there is growth opportunity for traditional bricks and mortar stores in Australia, the David Jones team seems to have badly miscalculated market trends.
It’s not just that the brand focus is inappropriate or that the food hall idea isn’t working – but David Jones’s traditional market is moving out of the city centres and increasingly shopping in the suburbs. All their promises are delivering almost nothing.
If true, the CEO churn is hardly surprising.