Woolies execs take pay cut

Senior Woolworths management will take pay cuts of as much as 30% in the next three months as part of efforts to save money and retain staff forced to stay at home under the Covid-19 lockdown. It is not clear how much the R29bn company will save from the pay cuts, but previous Woolworths group CEO Ian Moir took home R23m in pay in 2019.

Senior Woolworths management will take pay cuts of as much as 30% in the next three months as part of efforts to save money and retain staff forced to stay at home under the Covid-19 lockdown.

Companies across the country have come up with measures that include suspending dividends, halting rent payments and deferring capital expenditure to cope with the financial effects of the 21-day lockdown.

Woolworths board members, CEO Roy Bagattini and the group’s senior executive team will forgo up to 30% of their fees and salaries to help pay salaries of workers at its clothing division and add incentives for workers at its food outlets.

It is not clear how much the R29bn company will save from the pay cuts, but previous Woolworths group CEO Ian Moir took home R23m in pay in 2019, with SA CEO Zyda Rylands earning R11.9m, according to the company’s latest annual report.

FNB Wealth and Investments analyst Wayne McCurrie said he expected other companies would follow suit.

“I think it is a noble gesture. There is more to come here [from other companies] to show solidarity with the people who are suffering under lockdown ... Woolworths is just the first,” McCurrie said.

But the company could have been clearer about how much it stood to save from the initiative, he said.

On Monday, with its clothing and homeware stores closed, Woolworths said that it was also cutting back on capital expenditure and prioritising online sales, but expected profits to fall by more than a fifth in its financial year to end-June.

The clothing and homeware divisions, which contribute more than half the group’s annual sales of

R37.4bn, had a 27.8% drop in sales in the four weeks to endMarch, while sales at supermarket chains rose 27.6% during the period.

The company said it was delaying payment to suppliers and cancelling some clothing and home orders due during the lockdown period.

“Capital expenditure has been cut, with only critical projects moving forward. We have engaged with our suppliers to reduce apparel product intake and to extend payment terms,” it said.

Woolworths’s drop in clothing, home and beauty sales in the weeks before the lockdown is in line with the rest of the clothing sector.

Retailers including TFG and Pepkor have said that they will not pay rent in response to the massive drop in income during the lockdown.

Woolworths said on Monday that it would be “meeting landlords to explore alternative arrangements to current lease commitments”.