McCrann: Brad Banducci signs off with stellar financial performance at Woolies

Brad Banducci should feel pretty satisfied with the latest result at Woolies - his final mark on a stellar turnaround at Australia’s biggest supermarket group.

Outgoing Woolworths boss Brad Banducci. Picture: NCA NewsWire / Adam Yip

Brad Banducci is entitled to be pretty, if also assuredly – that’s just who he is – quietly satisfied with his ‘departure’ result at Australia’s biggest supermarket group Woolworths.

Banducci – who is quite simply one of the plain old-fashioned nicest CEOs I’ve dealt with in over 50 years of financial journalism – leaves Woolies in markedly better shape than when he walked into the top job back in 2016.

Back then he had to extract Woolies from its disastrous attempt to take on Bunnings with its Masters ‘big box’ hardware play.

The once overwhelmingly dominant basic Woolies supermarkets were paddling – given the dollars and focus poured into Masters. And against a revived Coles.

Despite all the media hysteria this year – over the Australia Day (non) merch and Banducci’s brain-freeze walk-out on the ABC’s Four Corners – the numbers speak for themselves.

Incidentally, before that, earth to the AFR: somewhere between 95 and 98 per cent of shoppers don’t watch Four Corners. Or indeed, read the AFR.

Back in 2016, the basic Woolies food business – excluding petrol, liquor and convenience – generated $35bn in sales and a gross profit (EBIT) of 4.4c in the sales dollar.

This year’s numbers were $50bn in food sales, an EBIT of $3.1bn and a gross profit of 6.1c in the sales dollar.

That tells me, and I’m telling you, two big things.

He’s been a very good CEO in doing the two big things that CEOs are supposed to do.

Profitably grow the business; but also balance the interests of shareholders and shoppers. Unhappy shoppers are not good for shareholders.

Very specifically, he’s kept Woolies winning the main game against Coles.

Back in 2016 Coles – then inside the Wesfarmers retail conglomerate – had sales of $32bn and generated a gross (EBIT) margin of 4.7c in the sales dollar.

The figures are not exactly comparable, as Coles back then reported its numbers as food and liquor; and its margin also included convenience.

This year, Coles reported supermarket sales of $38bn and a 5.2c in the dollar gross margin.

So Banducci leaves a Woolies still a third bigger than Coles and with a higher profit margin.

That’s the ultimate main game and Woolies is still winning it.

But – as I can say it, and would hope that you would accept it, over the hysterical, irrational and mostly ignorant attacks on the major supermarkets – Woolies and Coles both, and Aldi and IGA, they really do aim to balance shareholder and shopper.

Less clear-cut is the way they deal with suppliers. Screwing, as best they can, the big guys, good. Small suppliers? It’s a mixed bag.

And of course, let’s never forget the disruption of Covid: how supermarkets survived that; and were core to us surviving it as well.

Less obvious in the big numbers is the huge future-profit building changes Banducci has overseen in what might be termed “the tech back office”.

Data analytics; B2B operations; monetising the logistics cost base; and of course, basic online service.

Yes, Big W is still an operational and structural mess.

But hey, he’s got to bequeath his successor Amanda Bardwell at least one challenge.