Woolworths names SA high-flyer Roy Bagattini to replace Ian Moir
MARKET PARTICIPANTS MAY FEEL MR BAGATTINI MAY BE MORE OPENMINDED IN TERMS OF CONSIDERING THE GROUP’S OPTIONS WITH DAVID JONES
MANAGEMENT WOULD NOW PROBABLY BE LASERFOCUSED ON AREAS THAT IT COULD CONTROL AND RECLAIM MARKET SHARE, SAYS ANALYST
Woolworths has appointed a top executive from US fashion group Levi Strauss to replace group CEO Ian Moir, whose reign has been overshadowed by the retailer’s disastrous foray into Australia.
Analysts said Moir’s departure on Tuesday after more than nine years at the helm was unsurprising given the performance of the retailer’s David Jones department store chain in Australia, which has seen its value written down to less than half of what Woolworths paid for it.
The news sent Woolworths’ share price soaring 8.3% higher to close at R52.20, its biggest one-day gain in more than six years. The shares are now trading at just less than half of a record high of R108 reached in November 2015.
The latter years of Moir’s time at the retailer were dominated by investor dissatisfaction over the group’s investment in Australia through David Jones, for which Woolworths paid about R21bn in 2014. Its valuation stood at about R9.6bn at the end of June 2019.
Moir, who was made CEO in November 2010, will be replaced by South African Roy Bagattini, executive vice-president and president for Levi Strauss Americas. Bagattini has held executive roles at SABMiller internationally and in SA.
“Market participants may feel that Mr Bagattini may be more open-minded in terms of considering the group’s options with David Jones, because he’s not as close to the acquisition as Moir was,” said Sasfin Wealth senior equity analyst Alec Abraham.
Woolworths, like other JSElisted retailers, had probably already been aggressively reviewing its store estate and expansion plans in response to continuing, almost nonexistent volume growth in the SA market, as well as consumers getting poorer over the years and the effect of online retailing, Abraham said.
Gryphon Asset Management analyst Casparus Treurnicht said, however, it was unfair to put the blame on Moir as the David Jones acquisition had been fully backed by the board and shareholders at the time.
Management would now probably be “laser focused” on areas it could control and reclaim market share, said Treurnicht. Fashion had been a weak spot for Woolworths in recent years.
Woolworths said on Tuesday that in addition to leading many merger and acquisition projects during the course of his career, Bagattini had spearheaded the turnaround of several companies and successfully driven their growth and expansion.
“Roy has extensive operational, management and turnaround experience in global consumer and retail markets, which will prove invaluable as we continue to navigate the structural changes taking place in the retail sector and the challenges particular to our group,” said Woolworths chair
Hubert Brody. Argon Asset Management equity analyst Bjorn Samuels said that David Jones aside, the Woolworths group had performed well under Moir. The David Jones acquisition had shifted management focus away from the group’s core SA business, “causing Woolworths to score some own-goals in the latter part of his decade-long tenure”.
Levi man: Levi Strauss executive vicepresident and president for Americas Roy Bagattini has been appointed as Woolworths CEO, replacing Ian Moir.