Woolies: sevenyear intraday low
Exodus of top executives continues with Australia’s Gardner latest to quit
Woolworths’s share price reached a new seven-year intraday low of R45.01 on Thursday as reports of executive resignations continued to dog the group and added to investor jitters ahead of the release of interim results next week.
The Woolworths’ share price reached a new seven-year intraday low of R45.01 on Thursday as reports of executive resignations continued to dog the group and added to investor jitters ahead of the release of interim results next week.
The upmarket clothing and food retailer, which has seen its share price slump from a high of R108 in November 2015 following the R21bn acquisition of Australian department store chain David Jones, has been hit by a series of director departures.
On Thursday a group spokesperson confirmed that Ashley Gardner, the CFO of Woolworths’ Australia was leaving at the end of February but said this was part of a plan announced in May 2018.
In a SENS announcement released then the group said it was simplifying its Australian regional leadership structure and that the role of regional CEO had been discontinued. “Consequently John Dixon [regional CEO] will leave the group,” it said. Dixon resigned with immediate effect. At the time there was no mention of Gardner. On Thursday a spokesperson said Gardner’s departure was part of “streamlining” that had been announced in 2018.
Asief Mohamed, chief investment officer of Aeon Investment Management, criticised the manner in which the news of Gardner’s departure was conveyed to the market, saying it added unnecessarily to shareholders’ worries.
In a dramatic development earlier in the week, Woolworths announced the resignation, with immediate effect, of Australiabased nonexecutive independent directors Gail Kelly and Patrick Alladay.
One analyst, who did not want to be named, said the resignations had been prompted by the sudden departure of David Jones CEO David Thomas, announced two days earlier. The Woolworths’ spokesperson said the company was not prepared to comment on reasons for the two resignations.
Kelly and Alladay’s resignations bring to four the number of high-profile resignations from the board in the past 12 months. In May 2018, around the time of Dixon’s resignation, Stuart Rose announced his immediate resignation from the board. Rose, a highly regarded UK-based retailer and former executive chair of Marks & Spencer, had been on the board for seven years. The departures see the board reduced to 10 directors, four of whom are executives and one, chair Simon Susman, is non-independent, nonexecutive.
On Thursday the Woolworths’ spokesperson would not comment on reports that Zyda Rylands, CEO of Woolworths SA, had been on extended sick leave in the months ahead of the annual general meeting in November 2018.
Rylands is regarded as a key driver behind the success of Woolworths’ Food, the only division that has generated consistent profit growth in recent years. Mohamed said at its current level “the share has a lot of bad news priced into it”. He said the critical issue for shareholders is whether or not management can stabilise the situation.