South Africa’s Woolworths appoints turnaround specialist as CEO steps down
It is the end of an era at Woolworths Holdings and a beginning of a new one: CEO Ian Moir is stepping and being replaced by Roy Bagattini.
Bagattini was born in South Africa and is currently serving as the president of Levi Strauss and Company in the Americas. His appointment is effective from 17 February 2020.
The Woolworths’ share price gained as much as 10% on Tuesday 14 January, when the retailer announced the news to the market.
Mixed shopping bag
Moir was CEO for nine years. Prior to that, he was the CEO of Country Road. Analysts are in agreement that Moir introduced many innovations during his tenure and drove the growth of Woolworths’ food division. However, in recent years, his name has been synonymous with the disastrous acquisition of David Jones.
David Jones in numbers
Woolworths has instituted two write downs of its initial investment in Australian department store David Jones:
- a total of A$712.5m ($489.8m) in 2018;
- and a further A$437.4m in 2019.
In August last year, Moir conceded that critics who branded the $2bn David Jones deal a mistake were correct. He also proclaimed in an interview with Bloomberg that the worst was over. In another interview, Moir admitted Woolworths paid too much for David Jones.
Around the same time last year, the Woolworths board asked Moir to dedicate his time to Australia, where he would be based to work on turning around the business Down Under.
This is not the end of the road for Moir at Woolworths Holdings, as the company will keep him on as acting David Jones CEO. He will work closely with Bagattini.
Tasks ahead for Bagattini
Bagattini is a turnaround specialist who worked at the Carlsberg Group and SAB Miller.
“Roy has operational, management and turnaround experience in global consumer and retail markets, which will prove invaluable as we continue to navigate the structural changes taking place in the retail sector and the challenges particular to our group,” said Woolworths chairperson Hubert Brody.
Peter Takaendesa, a portfolio manager at Mergence Investment Managers, previously told The Africa Report that Woolworths was not the only South African retailer to have made the costly mistake of buying troublesome international operations.
“But … [Woolworths’] peers … cut their losses early by exiting underperforming assets while Woolworths has continued to defend its strategy and exposure,” Takaendesa said.
Australia, a drag
In the same interview last year, Takaendesa pointed out: “Woolworths is facing structural and cyclical headwinds in most of its key business and only the food retail business has been a star performer.”
Improving execution on the South African clothing business and reducing exposure to Australia would go a long way in effecting a turnaround for the group.
“There is no easy way out, but we believe it is necessary for the board to focus its efforts more on those areas,” said Takaendesa.
However, keeping Moir seems to indicate Woolworths Holdings will stay the course in Australia. At least, for now.
Despite a lacklustre performance in Australia, Woolworths’ South Africa operations have largely kept pace with or exceeded market expectations.