New hires a good look for Woolies
Top beauty retailer Kneale joins board as it sets about rebuilding
● The arrival at ailing Woolworths of David Kneale, the former CEO of health-care and beauty chain Clicks, may be just what the retailer needs.
This week, Woolworths announced the appointment of Kneale and Thembisa Skweyiya as nonexecutive directors. The move comes as the retailer begins to overhaul its leadership team after a slew of key resignations last month.
In February alone, three executives parted ways with Woolworths. They included David Jones CEO David Thomas, the third CEO to have left since Woolworths acquired the Australian chain in 2014.
Kneale took up the reins at Clicks in 2006, having been brought in from the UK’s Boots pharmacy chain to enliven the South African health-care and beauty group.
Pinning its hopes on the man who managed to grow the Clicks chain to a R50bnmarket-capitalisation business from R5bn in just over a decade seems like a clever move by Woolworths.
Damon Buss, an equity analyst at Electus Fund Managers, described Kneale as an “astute retailer” who would add “immense value” to board discussions at Woolworths.
But analysts believe Woolworths still needs to appoint executives based in Australia, or those with strong Australian retail experience.
As Woolworths overhauls its leadership team, it is also in the midst of a strategic shift in its David Jones business, an acquisition that cost it an overstated R21.4bn and whose flagship store in Elizabeth Street, Sydney, is being revamped.
Woolworths is also implementing strategic changes in its fashion, beauty and home division in SA, where sales have slowed.
The group’s fast-fashion approach is far too competitive and a high risk, said Bjorn Samuels, an equity analyst at Argon Asset Management. “From recent interactions it is apparent that management are taking the necessary steps to restore the core South African clothing business.”
These include replacing the David Jones brand with its former and more trusted Woolworths brands, which have better resonance with its traditional customers, as well as moving away from high fashion, he said.
On the managerial troubles at Woolworths, Buss said: “This state of flux at best delays the turnaround of these two businesses [David Jones and the South African nonfood unit] and heightens risks of further deterioration in operational performance.”
Kneale has been lauded by industry peers as a maverick in beauty and cosmetic retailing, an area that Woolworths has sought to grow.
The beauty segment at Clicks posted consistent and significant growth with Kneale at the helm.
Woolworths has tried to expand its beauty offering by introducing a wider array of sought-after international brands, including Lancôme, Clarins and Gatineau, and has increased its stock of international fragrances and skin-care ranges.
It has also invested in an in-store “cosmeceutical” experience and spa treatments in a deal with Sanctuary Spas.
Beauty and cosmetics are “a growth area for Woolworths, especially as Clicks and DisChem are doing so well in this space”, said Buss. However, Edcon’s debt restructure could see market share — which has gone to its competitors — return to Edgars, he said.
Said Samuels: “Kneale has a wealth of experience in beauty and cosmetics … Woolies has been looking to grow this beauty category … [and] insights from David Kneale could assist them in gaining more market share.”
But Buss said the fact that Manie Maritz — who has been named MD for Woolworths fashion, beauty and home — would step into the role only in 2020 did not bode well for the division’s turnaround.
When reached for comment, Kneale declined to speak about his new appointment.