Big W turnaround in doubt after chief executive’s shock departure

WOOLWORTHS could have another Masters on its hands, with Big W’s future under a cloud after its chief executive’s shock resignation.

Big W’s future hangs in the balance.

THE future of troubled retailer Big W is under a cloud after chief executive Sally Macdonald quit just 10 months into the role.

Speculation is rife that Woolworths will offload the struggling discount chain, just like it did with Masters when former hardware boss Matt Tyson quit in February.

“It is apparent that the transformation of BIG W will take three to five years to complete and, unfortunately, this time horizon is inconsistent with Sally’s expectation when she joined,” Woolworths managing director Brad Banducci said in a statement.

But retail analysts did not buy the explanation, while rumours swirled about a disagreement between Ms Macdonald and Mr Banducci over Big W’s transformation strategy.

“Obviously something has happened internally but the whole discount department store market is an endangered category, with the likes of Amazon and the broader push for convenience pricing,” analyst Steve Kulmar told Fairfax.

He said he believed Ms Macdonald had been appointed as part of a broader strategy to “window dress” Big W before selling it, but that her exit would “put the Big W turnaround back by at least 12 to 18 months”.

Woolworths shares dipped on the news of Ms Macdonald’s resignation, losing 12 cents, or 0.51 per cent, after dropping to $23.24 at 11.35am AEDT, before closing at $23.30.

Shares in rival Wesfarmers, which owns star performer Kmart and its humble sister store Target, was up 56 cents, or 1.38 per cent, to $41.06.

Big W boss Sally Macdonald has quit after 10 months.

Ms Macdonald has been credited with turning around luxury handbag retailer Oroton as chief

executive from 2006 to 2013.

She took the helm at Big W in January, prompting concern from some commentators that her background may not have prepared her for the cut and thrust of running a discount department store.

Her premature departure was likely to have shaken investors, CMC Markets chief market strategist Michael McCarthy told AAP.

“What they are essentially saying is that an expert in this area with a track record of success thinks this will take too long, and that’s why we are seeing pressure on Woolworths share price,” Mr McCarthy said.

BIG W’S STRUGGLE

Woolworths’ home improvement business head David Walker will replace Ms Macdonald as Big W’s acting chief executive.

The discount department store chain has been struggling to grow its sales, with first-quarter sales falling 5.5 per cent to $880 million compared to a year ago.

When removing the effects of store openings and other one-off events, comparable sales fell 5.7 per cent.

Woolworths booked about $460 million in asset writedowns related to Big W and Ezibuy, the group’s online retailer, when it reported a $1.235 billion annual loss in August.

Big W’s underlying earnings slumped to a $14.9 million loss before significant items, compared to a $111.7 million profit a year earlier.

Sales were down 2.8 per cent to $3.8 billion partly due to clearance activity and a winter fashion range that Ms Macdonald had said did not “resonate” with customers.

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