Is there any stopping Roger Corbett? Today’s better than expected Woolworths profit result sent shares in the retailing giant to a record high of $15.56, meaning “Crusher Corbett” might be again encouraged by his board to extend his tenure.
It was a cunning softening up effort by Woolworths CEO Roger Corbett and chairman James Strong in the Weekend edition of The AFR and again in today’s paper.
The front page story on Saturday and business pages yarn today were so comprehensive that they covered all the issues, including succession, new areas of business, current plans and the revamp still going on inside the country’s most aggressively-run retailer.
A good pre-emptive strike by The AFR which was available to its competitors in print and TV, if they had thought of it. But it did leave the competition with little to go with and take the story forward from the results announcement today, apart from the actual numbers and the resultant 54c share price surge to a record high of $15.56.
The Saturday read even mentioned the membership of the Fairfax board by Mr Corbett, but didn’t go on to press him on whether he had ambitions to chair the media group, as company sources suggest.
His answers to those questions would have been fascinating, especially in light of the suggestion floating through both stories that Roger Corbett might not want to leave Woolies next year. He seems to be quite determined to drive the retailer further.
Chairman James Strong might have to elbow him out of the CEO’s role, much in the way the previous chairman, John Dahlsen, punted Roger’s predecessor, Reg Clairs, for vastly different reasons. Dahlsen himself was punted after falling out with Corbett four years ago.
Woolworths did more than was expected of it by the market when it turned in a sold first half profit, a higher dividend and forecast a double digit result for the full year.
Net earnings of $440 million after tax were around what the market forecast. That was for the statutory 27 week first half this year. But on a comparable basis to last year’s 28 week first half, Woolies lifted net earnings 13.7% to $452.2 million. Interim dividend has been raised to 24c from 21c after all the group’s businesses produced very sold contributions, even Big W where a sales slowdown late last year seems to have been reversed without too much impact on margins.
As well the company outlined a solid justification for the Australian Leisure and Hospitality takeover, explained how it and its other hotels would be integrated into the company, as well as providing some detailed outlines of the second stage of its long running Project Refresh logistics and supply chain.
One point not explored in much depth from The AFR stories is Woolies new target for liquor post the ALH takeover and integration of the Queensland and Victorian hotels of Bruce Mathieson, the partner in the bid. Roger Corbett made no secret of aiming at $2.5 billion a year in sales for Woolies liquor businesses.
Now that’s been raised, after the ALH deals, to $3.5 billion, a move that will not be liked by the small competition. This is what the company said about liquor today:
“All our existing liquor operations, including Dan Murphy’s, BWS, First Estate and attached liquor, continue to perform well and record strong growth in both sales and profits. Group liquor sales for the first half, including our jointly owned liquor business MGW, and 2 months of ALH liquor sales totalled $1.4 billion. Combining the liquor business of ALH, MGW, BMG and Woolworths, we anticipate that total liquor sales for the Group will exceed $3.0 billion on an annualised basis, which well exceeds our previously stated objective of achieving $2.5 billion liquor sales. Our new target is now $3.5 billion in total liquor sales.”
The usual mention of ‘bolt-on’ acquisitions was uttered, but the more substantive comment from Corbett and directors was that the company’s capital management program will be re-examined after ALH and the Victorian and Queensland hotels are integrated and bedded down. That was estimated to take the best part of a year.
So the real attention inside Woolies will be making sure the expensive hotels and liquor plunge is integrated, without management forgetting that they are retailers and that the margin has to be protected and grown.
Woolies management knows the task. A year ago, distracted by the rapid growth in Coles Myer’s petrol offer and looking at other issues, they let real sales growth in supermarket slip sharply in the second six months.
This was tied to succession questions as Tom Flood, the putative successor to Roger, decided to retire because of his wife’s illness, forcing the board to ask Roger Corbett to stay on.
That slip will not be allowed to happen again. Not with Roger on the job and focused!