Woolworths CEO Brad Banducci in shock exit from supermarket giant

The departing Woolworths boss has admitted to a series of missteps but his board insists its succession planning has been ‘completely unaffected by external events’.

Woolworths chief executive Brad Banducci has admitted to a series of missteps, poorly handled announcements and improperly dismissing former ACCC boss Rod Sims by stamping him as “retired”, to offer his mea culpa and planned retirement from one of the toughest roles in corporate Australia.

Amid continued political and community heat surrounding the supermarkets sector, which will see Mr Banducci and Coles CEO Leah Weckert front a Greens-led Senate inquiry next month, the former Boston Consulting recruit who rose though the ranks to run the $41bn supermarkets giant will himself retire in September.

Mr Banducci will depart after 13 years with Woolworths, eight and a half of them as CEO, to hand over to Amanda Bardwell, the boss of its loyalty and e-commerce division and who will inherit a stack of challenges from slowing food and grocery sales to the Senate inquiry, another inquiry by the ACCC and political heat on its profits amid cost of living pressures for shoppers.

Mr Banducci, who recently sold a vineyard he owns in central Otago, New Zealand, and who plans to spend his 60th birthday later this year in his family’s village of Gattaiola in Tuscany, argued his retirement was long in the planning and predated the furore whipped up recently around Woolworths and the supermarkets allegedly price gouging shoppers to fatten profits.

Mr Banducci in particular has faced personal attacks over his supermarket’s decision to not sell Australia Day merchandise this year, which he was then forced to explain through a number of uncomfortable interviews and in public advertisements.

Then Woolworths, and Coles, faced allegations of price gouging leading to an inquiry from the Senate, led by the Greens, as well as inquiries from the ACCC, the trade union’s ACTU and a review of the code of the food and grocery code of conduct.

Board support

That pile-on has also been fuelled by the Albanese government as it becomes increasingly unpopular by a community that sees it not acting decisively or forcefully on cost of living pressures.

The pressure on Mr Banducci mounted even more this week when on the ABC Four Corners program that was looking at the behaviour of the supermarket giants, he walked out on the interview after making a comment about former ACCC boss Mr Sims but then resumed the interview – all awkwardly captured on film that was broadcast to the nation on Monday night.

But on Wednesday Woolworths chairman Scott Perkins denied the public pressure on Mr Banducci and the series of problems and own goals plaguing Woolworths accelerated Mr Banducci’s planned retirement, with work beginning last year on succession planning.

“Absolutely the timeline has been completely unaffected by external events of the last couple of weeks,” Mr Perkins said on Wednesday.

“I can be absolutely emphatic on that point. This process has been in train.

“There was no change to the timetable, no expedition at all.”

“And there has been an ongoing dialogue with Brad as to when the best time for him and the best time for Woolworths for that succession to be reactivated. During the middle of last year we started to focus on this a little bit more intently.

“We formed a subcommittee of the board, we appointed two external advisers, one who was well known to the firm in terms of talent development, and knew our internal benchmarks, and also an external executive search, as you would expect as the prospect of the chief executive of Woolworths is one that really does attract international attention.”

The Woolworths chairman said candidates were interviewed late last year and this continued into the new year.

Mr Banducci joined Woolworths when it was struggling at its supermarkets, facing intense competition from a rejuvenated Coles and was considering what to do with its disastrous foray into hardware with its Masters chain that lost billions and was ultimately closed by him when he became CEO.

On Wednesday Mr Banducci said the board was “flexible” if his retirement and succession planning needed to be deferred given recent events.

“And I did consider that for a moment, but judge me as you might, hopefully ‘authentic’ is a word that will be used, but we have a plan and the best thing was to stick to the plan.

“It didn’t occur to me to delay, but actually that wouldn’t have been authentic.”

Mr Banducci said his retirement underlined his world view of the “circle of life”.

“It’s eight years since I got this privilege and kind of felt right to close that circle the way it started.”

Apologies

Mr Banducci also revealed he telephoned former ACCC chairman Mr Sims to immediately apologise for dismissing him on TV as “retired” in a disastrous interview that made national headlines this week.

“The most important thing from the Four Corners interview, and I learned a lot from that, is that I immediately phoned Rod Sims and apologised afterwards … and to me that was important for who I am and what I stand for and what I would like to achieve.”

Mr Banducci told The Australian he gets “miffed with myself” when he doesn’t do as well as he needs to do.

During the interview, he was asked about comments from Mr Sims about the lack of competition in the supermarket space, to which Mr Banducci said Mr Sims was “retired” – suggesting he might be out of touch with recent developments.

That later saw Mr Banducci walk away from the interview but then return.

“My job is to accurately represent Woolworths and when I don’t I get upset with myself. I can only do one thing, which is get up and be better the next day,“ he told The Australian on Wednesday.

Intense political pressure is part of the Woolworths CEO role for Brad Banducci. Picture: John Feder

Mr Banducci said he would “take his lumps and lessons” from the recent furore around his comments on Four Corners, the decision over not to stock Australia Day merchandise and the allegations of price gouging and various inquiries into the supermarkets.

“There is always things we can be better at, that’s what gets us up in the morning.”

In an emotional note sent to Woolies staff on Wednesday morning, Mr Banducci added that the timing of his decision to retire “felt right”, but declared he was not intending “to go quietly into the night”, with six months still to run in the top office.

“This is a decision I have been contemplating for a while especially given it is literally eight years since my appointment and as we go into the Woolworths Centenary and the timing felt right,” he said.

Mr Banducci rejected that he was “tired or burnt out”, but rather “as energised by our business and our potential as I have ever been”.

He was not, he said, “worried about the various upcoming price inquiries”.

“I am looking forward to effectively representing Woolworths at these important forums.

“I think a leader should go before they need to.”

Profits and loss

Also on Wednesday, Woolworths announced its interim results, showing revenue up 4.4 per cent to $34.64bn and a loss of $781m, with that dip into the red pushed by more than $1.7bn in impairments and writedowns linked to its New Zealand supermarkets arm and its investment in Dan Murphy’s owner Endeavour Group. These impairments were announced to the market in late January.

Amanda Bardwell will be the new Woolworths CEO. Picture: Nikki Short/NCA NewsWire

The interim results, although showing a loss due to the writedowns as well as a 60 per cent earnings slump at Big W, did reveal that its supermarket arm was more profitable with margins at its Australian stores lifting 24 basis points to 6.1 per cent – the fattening margins could invite further criticism from critics arguing both Woolworths and Coles were raking in higher profits by squeezing down on suppliers and overcharging shoppers.

Woolworths declared an interim dividend of 47c per share, up from 46c, and payable on April 11.

The retailer’s profit before the billions in writedowns was $929m, up 2.5 per cent.

At its flagship Australian supermarkets arm, sales rose 5.4 per cent to $25.89bn as earnings rose 9.9 per cent to $1.57bn. Margins at the supermarket arm lifted 24 basis points to 6.1 per cent.

Its Big W general merchandise chain sales fell 4.1 per cent to $2.59bn, as earnings slumped 60 per cent to $54m.

Turning to outlook, Mr Banducci said sales in the first seven weeks of the second half have continued to moderate, reflecting lower inflation and a more cautious consumer.

At its Australian supermarkets sales rose 1.5 per cent for the first seven weeks, impacted by a further moderation in inflation and lower item growth. While underlying cost inflation (including wages) in the second half is expected to remain high. Earnings growth in the second half is expected to be below the first half.

Big W sales declined by approximately 6 per cent for the first seven weeks.

Additional reporting: Christine Lacy

Originally published as Woolworths CEO Brad Banducci in shock exit from supermarket giant