Woolworths’ new chief executive Grant O’Brien is planning an aggressive push to open 39 new supermarkets while reviewing the company’s troubled Big W and Dick Smith stores.
Australia’s biggest supermarket chain says it will create more than 10,000 new jobs and boost its employee training as it conducts a “wholesale review” of its supermarket, which it says could increase fresh food sales by up to $2.5 billion.
The supermarket giant plans to increase the total number of stores to 117 in fiscal 2012, compared with 73 last year, with the opening of 39 supermarkets, seven Big Ws and 15 Masters home improvement stores.
Woolworths aims to open almost double the number of new supermarkets opened by rival Coles last year.
“(We’re) taking this opportunity to look at this as a new era and attack it with a fresh purpose and a fresh set of eyes,” Mr O’Brien told analysts on Wednesday.
Mr O’Brien, who hosted an investor day in Sydney on Wednesday, said the grocery giant was not improving fast enough in the areas of grocery and non-food.
“I can see substantial room to make inroads into this category,” Mr O’Brien said.
Woolworths will also conduct a strategic review of its Dick Smith business and BIG W chain following a succession of weak sales results.
First quarter sales at Big W fell by 2.7 per cent to $1.04 billion while Woolworths closed seven Dick Smith stores in fiscal 2011.
Morningstar analyst Peter Warnes said Mr O’Brien had a reasonable chance of achieving the goals set out.
“He wants to generate long-term benefits for shareholders and other stakeholders,” Mr Warnes said.
“Opening up 39 supermarkets in the current year is a monster effort … after Coles opened 21 in the past year.”
On the less profitable divisions of Big W and Dick Smith, Mr Warnes said Woolworths could merge the Dick Smith stores into its Big W and Masters hardware businesses.
Woolworths says it aims to record high single-digit sales growth and 10 per cent earnings per share (EPS) growth assisted by small takeovers and capital management.
The retail giant also revealed plans to improve its online business.
Mr O’Brien outlined the company’s aim to be Australia’s leader in multichannel retailing, including a mobile platform that would connect directly from its supermarket smartphone app through to the online store.
These are expected to go live early next year.
“The future demands that we provide the opportunity for customers to shop as they do today, but also shop online, either from home or on their smart phones,” Mr O’Brien said.
In the home-improvement sector, Mr O’Brien said he wanted Woolworths to become a unique, sustainable and profitable business.
Under his recently announced contract Mr O’Brien, 50, will be paid $1.9 million in his first year in the job, but that could double with performance-based incentives.
Shares in Woolworths closed 28 cents lower, or 1.18 per cent, at $23.39, in line with the broader market.
