Australia’s Woolworths CEO quits as food price inquiry looms, half-year profit misses

WOOLWORTH Group on Wednesday said CEO Brad Banducci will retire after more than eight years at the helm, just as Australia’s biggest grocer prepares for a public inquiry into suspected price gouging and flags weaker second-half earnings.

Banducci, who has been at Woolworths for 13 years, has in recent weeks faced public angst and political pressure over high grocery costs, and was criticised after refusing to stock certain merchandise for Australia Day due to lack of sales.

This week, he almost walked out of ABC’s Four Corners programme addressing allegations that supermarket allegedly keep prices high despite a cost of living crisis.

“It has been a privilege to be a member of the Woolies team and one I have never taken for granted,” Banducci said in a statement.

In an email to staff, seen by Reuters, Banducci said he was not retiring because he was tired or worried about the upcoming inquiry, but because it was “time to pass on the baton”.

Woolworths and rival Coles face an inquiry next month amid claims that top grocers were inflating profit margins, worsening living costs for Australians. Woolworths and Coles have defended price rises in submissions to the inquiry.

Banducci will retire from the roles of managing director and group CEO in September, Woolworths said. He will be replaced by Amanda Bardwell, currently the managing director of WooliesX which includes Woolworths Digital and Media.

Banducci’s departure “will come as a negative surprise,” to markets, said Jarden analyst Stuart Archibald.

Woolworths’ share price was down 5.7 per cent at market open after the announcement.

Cautious spending

The company forecast lower group operating earnings in the second half of the year compared with the first, with Woolworths Food Retail sales rising a meagre 1.5 per cent so far in the January-June period.

“Sales in the first seven weeks of H2 F24 have continued to moderate, reflecting lower inflation and a more cautious consumer,” Banducci said in an exchange filing.

Underlying net profit attributable to shareholders was A$929 million (S$818 million) for the half-year ended Dec 31, compared with A$907 million in the same period a year earlier. That missed LSEG’s average analyst estimate of A$941 million.

Australian Food, the top money-making segment, clocked first-half sales of A$25.90 billion, up 5.4 per cent on year, with a gross margin rising 96 basis points to 28.9 per cent.

In New Zealand Food, sales jumped 2.3 per cent to NZ$4.17 billion (S$3.5 billion), but the gross margin declined 18 basis points to 22.6 per cent owing to higher costs.

Woolworths declared an interim dividend of 47 Australian cents a share, versus 46 cents last year. REUTERS