If there is one lesson from Woolworths profit warning this morning, and NAB’s messy but disappointing result yesterday (click here for more), it’s that turnaround stories take time. A lot of time.

Woolworths is the classic. It is paying the price for what many believe to be an incompetent leadership team and Board, and that famous “Woolworths arrogance” that suppliers and others so quickly recognize. It took its eyes off the ball as Coles (and now Aldi) ate its lunch.

However, the outgoing CEO, Grant O’Brien, is still in the job – the new CEO is yet to be appointed and is probably months away from actually taking over.

Big W is still a basket case, Masters continues to lose money, and the Woolies supermarket business has just launched price campaign number 4 or 5 with ‘Price Drop’ and ‘Low Price, ALWAYS ’.

Why should these work when the other 4 failed?

In case you missed the news, Woolworths announced that first half net profit after tax would be around $900m to $1,000m – down 28% to 35% on the first half of 2015.

This follows a decline in profit of around 5.5% in the previous half from $1,130m to $1,069m.

Woolworths profit by half year

And accompanying the profit announcement was yet another disappointing set of sales results. In the first quarter of 2016, comparable store sales for Australian food and liquor fell by 1.0%.

In contrast, Wesfarmers announced last week that Coles increased comparable store sales by 3.6% compared to the corresponding quarter in 2015. Rather than closing, the gap between Woolworths and Coles is widening.

Big W continued to lose share, with sales on a comparable store basis decreasing by 8.1%. Woolworths noted an improving trend as the quarter progressed, and let’s hope they are right, but they have said this before.

To put this sales outcome in context, Target reported a comparable store sales increase of 3.2% for the quarter, while Kmart soared by 8.6%. BigW remains a basket case.

Is Woolworths a buy yet?

With Woolworths trading around $25.00, many investors are going to be tempted to buy at these levels. And it might prove to be good long term buying, however consider these facts:

• With the profit downgrade, it is almost certain that the first half dividend in FY16 will be cut;
• A new CEO will make changes – they always do – and this will cause some internal disruption. He or she has not even been appointed yet;
• The sales gap with Coles is not narrowing – if anything, it is widening. If the new price campaign starts to work, then reassess – but there is no evidence yet to say that it is hitting the mark with consumers; and
• Decisions regarding what to do with BigW and Masters are still to be made.

My guess is that investor patience will be rewarded. Turnarounds of major corporations, like Woolworths or NAB, take a long, long time.

There is no hurry.

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.