Woolworths has been encouraged to divest from Big W and spin off its New Zealand operations as investors say both are contributing to profit losses.
The Australian Financial Review reports that First Sentier Investors portfolio manager Dushko Bajic spoke at a forum in Sydney this week, where he said he had proposed the change to Woolworths chief executive Amanda Bardwell.
Mr Bajic, whose company has invested in Woolworths, reportedly told Ms Bardwell “we would love it to be a simple Australian supermarket” and said Woolworths’ profits should be higher than those of Coles, which unlike Woolworths has no retail stores.
“Reinvest in your business, in your prices and make the most of the best locations of your supermarkets; (this) will not be able to be matched by your competition,” said Bajic.
But a Woolworths Group spokesman said there were no plans to sell Big W or the New Zealand supermarket business.
“New Zealand Food and BIG W had a challenging year impacted by value-conscious customers cross-shopping and cutting corners, but both businesses made good progress on their transformation plans with improved customer scores and item growth in the fourth quarter,” the spokesperson said.
He also claimed that Big W has “destroyed capital”.
Blackwattle Investment Partners portfolio manager Ray David also said Woolworths should outperform Coles.
Woolworths has been encouraged to divest from Big W and spin off its New Zealand operations as investors say both are contributing to profit losses.
A Woolworths Group spokesman said there were no plans to sell Big W or the New Zealand supermarket business.
“We are advocates of a simpler, more efficient business, as sometimes the essence of strategy is choosing what not to do, and we would welcome any strategy that simplifies the business and puts greater focus on the core,” David told the AFR.
Woolworths has seen its profits plummet, down to $108 million as of August 28, according to Sky News.
This represents a 93 percent decline from last year and comes amid losses of $1.5 billion as a result of the company’s New Zealand division.
