Woolworths chief executive Brad Banducci has left the food giant with a payout reportedly worth $24 million, while new research shows struggling Australians want more accountability from the big two supermarkets.
Banducci announced his surprise retirement in February this year, 48 hours after a disastrous appearance on Four Corners, where he walked out mid-interview; his last day was Saturday and his replacement, Amanda Bardwell, took over from Sunday.
His tenure has been turbulent since he took office in 2016, steering Woolworth’s through its disastrous Masters hardware collapse followed by the Covid pandemic, the uproar over its abandonment of Australia Day merchandise and allegations of consumer price gouging that sparked a Senate inquiry.
Banducci’s realised salary in 2023 was $10,640,763, according to the Australian Council of Superannuation Investors report, but with accrued shares and bonuses if targets are met, his golden handshake could be $24 million, according to figures released in The Australian Earlier this year.
Woolworths, which makes 2.5 cents on every dollar spent, this week reported initial net profit of $1.7 billion, down 0.6 percent from a year earlier.
But reported profit fell to just $108 million due to a $1.5 billion write-down at its New Zealand business.
Rival Coles posted an annual profit of $1.1 billion this week (up 10 percent), earning 2.56 cents for every dollar a customer spends.
By contrast, Australians struggling with the cost of living crisis are fed up with the duopoly of Woolworths and Coles amid huge profits for the food giants, nonprofit Oxfam said.
Woolworths boss Brad Banducci (pictured) had his final day as chief executive of Woolworths and walked away with a $24 million golden handshake, with his replacement taking the reins from 1 September.
The chief executives of Woolworths and Coles faced repeated questions about how to cope with political pressure and cut prices when they reported their financial results this week.
And the scrutiny is likely to continue, with an interim report from the ACCC’s supermarket inquiry due to be released in September.
The research is investigating the prices set by supermarkets and the relationship between wholesale, farm gate and retail prices.
Coles and Woolworths control 65 percent of Australia’s grocery markets.
The profit margins of major supermarkets including Woolworths (pictured) have come under scrutiny in the inquiry, with Woolworths and Coles previously accused of price gouging.
Coles this week announced a staggering $1.1 billion profit.
“It is unacceptable that while Australians are struggling to put food on the table, Woolworths and Coles continue to report staggering profits,” Oxfam Australia chief executive Lyn Morgain said.
It is clear that the Australian people are fed up with this.
“We need the government to step in and directly address the systemic failures that allow this toxic situation to continue.”
In addition to the ACCC investigation, ordered by federal Treasurer Jim Chalmers, the Queensland government organised its own rapid inquiry earlier this year, establishing a one-off supermarket pricing select committee.
“As the inquiry unfolded, it became clear that Queensland farmers do not feel empowered or protected to speak out against dominant retailers and navigate the complex and unbalanced complaints system that is poorly overseen by the Australian Competition and Consumer Commission,” concluded Bundaberg Labor MP and committee chair Tom Smith.
The Queensland investigation focused more on the price paid to farmers and producers than on cash prices.
But he did note that the duopoly’s two-thirds market share is a key factor in how corporate giants set prices at every stage of the supply chain.
In Canberra, a Senate committee examined supermarkets in April.
The head of Oxfam Australia has argued that the huge profits Coles and Woolworths made during the Covid-19 pandemic should be taxed as “crisis profits”.
Woolworths boss Brad Banducci (pictured) asked: “Can we get that out? Is that OK?”, then seconds later said: “I think I’m done, guys,” before walking off from an interview at Four Corners.
The chain’s decision to drop Australia Day merchandise on January 26 sparked an uproar among shoppers and at least one store was sprayed with graffiti (pictured)
“While Coles and Woolworths did not generate the crisis profit spikes we saw in 2021 and 2022 this year, they still made huge profits which is deeply concerning to many in the community with food prices so high,” Morgain said.
Oxfam assessed that in 2021 and 2022, Woolworths made $5.6 billion in “crisis profits” at the same time inflation was soaring and the pandemic and war in Ukraine were at their peak.
Woolworths investors will receive a fully-franked final dividend of $1.04 per share for the year, the same as last year. But there was also room in the fund for a fully-franked special dividend of $0.40 this year.
Coles shareholders are getting 68 cents a share, up from 66 cents last year.
“This situation of high profits has moderated slightly, but has not fundamentally changed, which is unacceptable,” Morgain said.
‘A tax on the excess profits of large supermarkets such as Woolworths and Coles would not only discourage price gouging, but would also help boost the budget during tough times and provide much-needed funds to tackle inequality and ease cost of living pressures.’
NewsWire understands that the Treasury is not considering a crisis profits tax.
The latest data shows supermarket inflation at Coles and Woolworths is slowing. At Coles, overall supermarket inflation has fallen from 2.2 per cent to 1.5 per cent over the past six months.
Woolworths said average retail food prices in the March quarter and June quarter were down 0.2 per cent and 0.6 per cent respectively on the past year.
Food and non-alcoholic beverage inflation stands at 3.3 percent for the year, compared to 5.9 percent in May 2022.
The Treasury points to the ACCC investigation and the commissioning of Choice to produce quarterly price monitoring reports as its main efforts to combat rising food costs.
“This is about creating a fair chance for families and farmers,” a Treasury spokesman said.
“Our efforts will help ensure our supermarkets are as competitive as possible so Australians get the best possible prices.”
Both Woolworths and Coles declined to respond directly to Oxfam’s comments.
A Coles spokesperson acknowledged NewsWire’s report on comments the Coles chief executive made during the week about its own inflationary pressures and pointed to the company’s sustainability report.
Coles donated the equivalent of 39.8 million meals to people in need last financial year, helping with disaster relief, hospital efforts and medical research campaigns.
CEO Leah Weckert highlighted the “increased external scrutiny” when she presented the results on Tuesday.
Ms. Weckert was asked the same question at least six times: “How can the public digest a $1.1 billion profit when grocery shopping for everyone seems so expensive?”
Coles cut prices on “hundreds” of essential and popular items and expanded how and when people collected Flybuys points, Weckert said.
If Coles were not profitable, grocery prices would fall by 3%, he said. Coles has also saved $80 million by strengthening anti-theft technology.
Many Australians’ superannuation funds have a stake in the two supermarkets. Coles could not say how many people benefited through their superannuation fund holdings, but people Coles considers “mom and pop investors” (less than 5000 shares) own 20.5 per cent of the company.
A Woolworths spokesman said that as Australia’s largest private sector employer, the company needed to balance delivering value to customers, “looking after” staff and “treating suppliers fairly”.
He had invested heavily in the company’s extensive supply chain network to enable it to withstand natural disasters and the Covid-19 pandemic, the spokesman said.
Last year, Woolworths donated $143 million in direct community contributions, 36 million meals to people in need and $15 million to food relief charities.
On Wednesday morning, CEO Brad Banducci was asked how he could “in all seriousness” claim that supermarkets were not driving inflation when the public sees the company’s $1.7 billion profit (the total profit before write-downs from the New Zealand business).
“Big numbers can be misleading,” Banducci said, pointing to the extraordinary benefits of retirement pensions.
The ACCC’s interim report was delivered to the government on Friday and is likely to be made public in mid- to late September.
