You do
have to ask why the bosses at Coles Myer are such slow
learners. The
2006 first half profit emerged today and it has all the marks of a cream puff
compared to the strength and vigour shown by its
bitter rival Woolworths.

By every comparison, Woolies is a bigger, financially stronger and more
profitable business, with far superior growth prospects, and that has been
apparent for more than 18 months.

Net profit after tax of $438 million was up 10.5% (16% on a comparable basis
after capital management changes) compared to Woolies’ $543 million, a 22%
rise. Earnings before interest and tax (a better measure of
corporate performance) up 31% at Woolies to $902 million, at Coles up just 11.9%
to $756 million.

Much of
that superiority has to do with Woolies’ questionable plunge into hotels and
gaming to the point where it is close to the country’s biggest owner of gaming
machines, with around 12,000 being operated in pubs in several states, especially Queensland, NSW and Victoria. But
better management of its core retail and liquor businesses has been a feature of
Woolies under Roger Corbett, with the Project Refresh revamp of its logistics
chain a big part.

Woolies’ supermarkets (including liquor and petrol)
saw earnings before interest and tax rise 22% to $703 million. At Coles the
increase was a more sedate 8.8% to $397 million, a long way
behind. A more
focused management (and better people) at Woolies seems to have been a key, and
that’s what Coles Myer has just done with a complete revamp of its supermarket
management structure.

people will be appointed to do the job previously done by one person, with the
new positions reporting directly to CEO, John Fletcher.

Hani Zayadi, who moved to become managing director off the Food,
Liquor and Fuel Group from K-Mart in late 2004 (when his
predecessor, Steve Cain left after an internal revolt against his management
style) is retiring and will return to Canada in August.

senior executive is leaving after 33 years and Coles will now have a managing
director in charge of supermarket merchandise, another in charge of supermarket
operations and the MD of Coles Express will run Coles Myer Liquor. The executive
in charge of customer strategy will add supermarket marketing to his

Woolies still has one executive running all
supermarkets, but with an operations executive, and heads for liquor, petrol and
marketing. Roger
Corbett, an experienced retailer remains in charge, and that’s the