Investor’s bold plan to change Woolworths and Big W forever

Woolworths has been encouraged to scrap Big W and spin off its New Zealand operations after investors say the two businesses are contributing to profit losses.

According to the Australian Financial Review, Dushko Bajic, portfolio manager at First Sentier Investors, spoke at a forum in Sydney this week, where he said he had suggested the move to Woolworths CEO Amanda Bardwell.

Mr Bajic, whose company has invested in Woolworths, is said to have told Ms Bardwell: “We want you to be a simple Australian supermarket”, and claimed that Woolworths’ profits should be higher than those of Coles, which unlike Woolworths does not have physical stores.

“Reinvest in your business, your prices and take full advantage of the superior locations of your supermarkets. Your competitors can’t match this,” Mr Bajic said.

But a Woolworths Group spokesman said there are no plans to sell Big W or the New Zealand Supermarkets Business.

“New Zealand Food and BIG W have had a challenging year as value-conscious customers have shopped more frequently with other brands and ordered fewer products. However, both companies have made good progress with their transformation plans, with improved customer scores and increased item counts in the fourth quarter,” the spokesperson said.

He also claimed that Big W has “destroyed capital.”

Ray David, portfolio manager at Blackwattle Investment Partners, also said Woolworths should outperform Coles.

“We are in favour of simpler, leaner operations because sometimes the essence of strategy is choosing what not to do. We would welcome any strategy that simplifies the operation and focuses more on the core,” Mr David told AFR.

According to Sky News, Woolworths has suffered a dramatic drop in profits, with profits up to August 28 amounting to $108 million.

This is a 93 percent drop from last year and comes amid $1.5 billion in losses from the company’s New Zealand division.