26November2015
AGM2015–CEO’sAddress
ThankyouChairman.
ThankyoueveryoneforcomingandforyoursupportofWoolworthsinthechallengingtimesaswell
asthegoodtimes.
IwouldliketopickupwheretheChairmanfinishedhisspeechandgivemysupporttohis
assessmentofthepotentialofourCompany.
Thereareopportunitiesavailabletousifwecanmeetandovercomethechallenges,andIfirmly
believewecan.
Woolworthsisastrongbusinessandhasthepotentialtobeevenstronger.Ourscale,network,
supplychainandprovenabilitytoextractoperatingefficienciesprovideastrongcompetitive
advantage.
Whilstwehavethesesignificantattributesandcurrentlyholdmarketleadingpositions,weareina
periodofimmensechangeandtransformation.Thiswillbeamulti-yeartask.However,weare
meetingthechallengesheadontoensureWoolworths’bestdaysareaheadofit.
2015Results
Lookingbackover2015,wehavebeentransparentaboutwhatwentwrongandhavebeenquickto
putinplacethestrategiesthatwillreturnustoasustainablepathtogrowth.
AustralianSupermarketshadadifficultfirsthalfdespiteastrongstarttotheyear.Unitsand
transactionsdeclinedleadingintoChristmasculminatinginsignificantunderperformancein
DecemberandJanuary.
Thefactwasthefundamentalsofouroffer,especiallypriceandcustomerservice,werenot
acceptable,andcustomersvotedwiththeirfeet.
Announcement
TodayIwanttogiveyouanoverviewofourresultsinfinancialyear2015,aswellasaninsightinto
management’scurrentpriorities,andtheoutlookfor2016.
Weactedimmediatelyanddecisively.WeinstallednewleadershipunderBradBanducci,whomoved
fromLiquortoheaduptheSupermarketsteam.
Simultaneouslywecommencedaprogramofsignificantinvestmentinpricesandservicethatwill
deliverstrongersalesmomentumandcustomer-leadingoutcomesgoingforward.
InMay,BradoutlinedhisplanstorevitaliseAustralianSupermarketstoinvestors.Whilstheiswell
underwayonexecutingtheseplans,Iwanttobeclearthatitwilltakeatleastthreeyearsforthese
toland.
Aconsequenceofourdecisiontomovequicklyisthatweareinvestingoverandabovethecost
savingsidentifiedacrossthebusiness.TheimpactoftheseinvestmentswillbefeltinFY16,resulting
inlowermarginsinAustralianSupermarkets.
I’llnowbrieflytouchontheresultsforourotherdivisions.
Liquorrecordedanotherstrongperformanceacrossallofourbrandsbothinstoreandonlinewith
MartinSmithinchargefollowingBrad’smoveintoSupermarkets.
Ourmulti-channelapproachtoLiquorisamodelforotherbusinessesintheGroupasitcontinuesto
gofromstrengthtostrength.
CountdowninNewZealandhadanimprovedyearofgrowth,andwebelievethereismoretocome
inFY16.
Hotelsalsohadastrongyear,however,theirprofitwasimpactedbyVictoriantaxchangesandthe
saleof54hotels.
TheGeneralMerchandiseresultcontinuedtobeimpactedbyourBIGWtransformationandthe
clearanceofunproductiveinventory.
Itwasalsoimpactedbysystemsimplementationissuesarisingfromthetransitiontoournew
merchandisingsysteminthesecondhalfoftheyear,whichimpactedstockavailability.Theseissues
arenowlargelyresolved.
Sowhileperformancevariedacrossdivisions,ataGrouplevelthelackofprofitgrowthwas
disappointingandclearlynotacceptable.
WhilstwemaintainedprofitinlinewithFY14,andslightlyincreasedourdividends,thisdidnotmeet
expectationsandwearenotsatisfied.
AsCEO,ultimateaccountabilityrestswithme.Iamconfidentthattheactionswehavetakentodate
andtheplanswehaveputinplacewillresultinabetterandstrongerWoolworthsintothefuture.
Currentpriorities
Nowletmeturntothecurrentfinancialyear.
AsGordonmentioned,theManagementTeamisfocusedondeliveringclearoutcomesandishardat
workontheplansoutlinedinMay.Iwilloutlinethesixprioritieswearefocusedon.
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Firstly,transformingAustralianSupermarketsisclearlythetoppriority.Itistheengineroomof
Woolworthsgenerating70percentoftheGroup’sprofit.
Tothatend,weareinvestingtobuildanewmodelthatwillbenefitWoolworthsandourcustomers
intothefuture.
WorkonexecutingBrad'splanoutlinedinMayiswelladvancedandsupportedbytherequired
investment.
Someprogresstopointtoinrecentmonthsincludescompetitivepricesandbettercustomerservice,
andourcustomershaverespondedwell.Wehavealsolaunchedournewmarketingcampaign,‘Low
Price,ALWAYS’andre-launchedWoolworthsRewards.
WeareworkingtodeliverontheHomeImprovementopportunity.Asthemarketcontinuesto
consolidate,thereisclearlyanopportunityforasecondbigboxhardwareretailerinAustralia.We
areworkingtoimprovethestoreformatandrangeand,pleasingly,thestoresthathavethenew
formataretradingsignificantlyaboveoldformatstores.
WorktotransformBIGWcontinues.AsGordonoutlined,wehaveaclearlineofsighttowards
improvedreturnstoensurewehaveoptionsavailabletous.
WeareembeddingourleanretailmodeltoensuretheworkundertakenunderourFuelforGrowth
programbecomesanongoinglowcostwayoflifeacrosstheGroup.
AsGordonveryvividlydescribedinhisaddress,weneedculturaltransformation.Iwholeheartedly
endorsehisassessmentoftheneedtoshiftfroma‘knowing’culturetoa‘listening’culture.Thisis
veryimportanttosecuringourongoingsuccessandwillbeembracedbytheWoolworthsteam.
Wearealsofocusedondevelopingourpeople.Iamparticularlyfocusedonrapidtalentgrowth
fromwithinWoolworthsaswedevelopourfutureretailers.Wewillalsorecruitworldclasstalent
externallywhenwecan.
Outlook
TurningtotheoutlookforFY16,itwillbeatransitionandrebuildingyear,notjustfinanciallybutalso
culturallywiththefocusonbecomingamuchmorecustomer-centricorganisation.
AsIhavementionedthismorning,thelargestimpactonmarginswillbetheresultofsignificant
investments,particularlyinpriceandserviceinAustralianSupermarkets.Theseinvestmentswillpreemptthecost-outprogramsasweacceleratetothenewmodelforourbusiness.
AmonthagoweupdatedthemarketonthelikelyNetProfitAfterTaxforH1'16of$900millionto
$1billion.Wearetrackinginlinewithourforecast.
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Thistransformationwillenableourbrandstoremaintheleadersintheirsectorsandtoprovidereal
growthopportunitiesintothefuture.Itwillbeamulti-yeartaskandwillrequirehighlysuccessful
executionofthestrategies.
Iwanttopaytributetoourstaff,particularlythebulkofourteamsthatareservingourcustomers
everydayandstrivingtoprovideatrulyworldclassoffer.
IwillnowhandbacktotheChairmantocontinuethemeeting.
ENDS
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