Wesfarmers’ Goyder in push to scrap quarterly updates

Wesfarmers’ Richard Goyder wants “distracting” quarterly sales updates dumped, arguing they add to short-term thinking.

Wesfarmers outgoing CEO Richard Goyder, right, and his replacement Rob Scott. Pic: Renee Nowytarger

Wesfarmers, whose retail stores include Coles, Bunnings, Kmart and Officeworks, could dump its quarterly sales update to investors.

The potential move comes after outgoing chief executive Richard Goyder said the presentations feed into short-term thinking by the market and are a distraction.

New CEO Rob Scott agreed the quarterly updates might come to an end.

Mr Scott today described the quarterly sales releases as creating “a lot of noise” that distracted from Wesfarmers’ goal to deliver long-term performance to shareholders.

Mr Goyder said he had advised Mr Scott to jettison the quarterly sales releases and conference calls with analysts and the media, with both sounding out investors and the analyst community to see if the proposal would be met favourably.

He pledged it wouldn’t threaten Wesfarmers continuous disclosure obligations if the quarterly sales updates were dropped.

If Wesfarmers does decide to abolish its quarterly update, other publicly-listed retailers could follow, such as arch rival Woolworths and department store owner Myer.

It comes as chief executives, directors and chairman become increasingly concerned about the short termism of investors and the markets, with the procession of quarterly, half year and full-year sales and earnings results limiting the ability to focus on long-term shareholder value and company performance.

“If I go back a long time ago, and I’ve been around for a while now, actually Wesfarmers went to quarterly profit reporting … and all it did was meant we had market reactions on 12 and 13 week profit performance but actually didn’t necessarily reflect the underlying profit of the business,” Mr Goyder said.

“And I have been reflecting on this for a while, I have had some conversations with some analysts and shareholders and we’ve got very clear continuous disclosure obligations, so if there is anything we are aware of (that) the market needs to know from a material point of view we would do that anyway.”

“I just don’t think it creates a lot of value.”

Mr Goyder said the practice of quarterly sales updates contributed to short-termism by the market.

“What we see is speculation beforehand which leads to the market moving one way or another and then the market moving one way or another when we put stuff out and it often cancels itself out.

“And shareholders who aren’t party to that don’t necessarily benefit.”

Today’s release of Wesfarmers first quarter sales saw its shares drop nearly 3 per cent, as the market reacted negatively to slowing growth at Coles and disappointing sales at its Bunnings and Homebase chains in the UK.

“Today is a good example I think, the market reaction to what overall is a pretty solid sales performance from a group point of view, markets move around quickly,” Mr Goyder said.

Mr Goyder said preparation of quarterly sales reports also took up a lot of time for Wesfarmers staff, analysts and the media.

“I don’t think there is great value in that,’’ Mr Goyder said. “Having said that, it’s my recommendation, Rob will make the decision and he will talk to shareholders.’’

Mr Scott agreed quarterly sales updates were a distraction and that shareholders wanted him to focus on long term performance.

“Quarterly sales reporting creates a lot of noise which doesn’t necessarily help that.’’

The market could be kept informed of sales at the half year, full-year and at the company’s AGM.