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'I regret the price, and buying it at that time.' Woolworths CEO considered resigning over Australia woes



Ian Moore

Woolworths Chief Executive Officer Ian Moir said his critics have a point when they say he made a mistake with a $2bn swoop for Australia’s David Jones chain five years ago - but insists the worst is over.


John Bowker | Fin24

“They were right,” he said in an interview at the South African retailer’s headquarters in central Cape Town. “I regret the price, and buying it at that time - hindsight is a wonderful thing - but I think we have a great asset now.”

Moir, a 60-year-old Scot, acquired David Jones hoping to create a southern hemisphere-wide giant offering upmarket food and clothing. The move began to unravel through a string of changes - notably a head office move to Melbourne from Sydney that required about 75% of the workforce to be replaced.

Two write downs of the business followed, most recently earlier this month. New IT systems, an online launch and a A$400m ($270m) refurbishment of a flagship store on Elizabeth Street in Sydney have caused further disruption.

“We should have done less over a longer period - but the benefit is we are pretty much through it now and in a better place as a business,” he said in his top floor office on Thursday. “We’ve got 20% still to go, but I do feel we are through the worst.”

Did he consider quitting? “Yes I did, but I thought it would be entirely irresponsible,” Moir said. “Falling on your sword is always the easy thing to do. I’m doing what I should do - taking responsibility for getting it right.”

Woolworths shares have slumped about 44% over the past four years, but Thursday brought a show of support from the market after the release of full-year results: A 3.6% gain, the most in seven weeks.

That’s less to do with David Jones than a strong performance in South Africa, where sales of Woolworths clothing improved in the second half after a botched move to younger, trendier lines a year ago. That required a return to basics and serving the group’s traditional, older customer, Moir said.

Meanwhile the food division outperformed the market for the 10th year in a row. David Jones sales continued to fall - down 0.8% for the year - though Moir said the completion of the Elizabeth Street store refurbishment in March should give that a boost.

 


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