Woolworths could broaden CEO search

The Woolworths board is considering extending its search for a new chief executive beyond supermarket executives.

Woolworths chairman Gordon Cairns has been on a “listening tour” of the investment community.

The Woolworths board, led by chairman Gordon Cairns, is considering extending its search for a new chief executive beyond the global ranks of supermarket executives, and is prepared to hire a new boss with experience in selling consumer staples into supermarket chains.

Mr Cairns has told institutional investors that if he can’t find a suitable chief executive who has previously run a supermarket then the board would consider “someone like me’’.

The comments come as Mr Cairns wraps up his “listening tour” of the investment community before this week’s Woolworths annual meeting.

A former boss of Lion Nathan, as well as food companies Arnott’s and Pepsico, Mr Cairns has spent a lifetime dealing with the large supermarket chains on behalf of consumer brands, and has said that a senior executive drawn from this world would fit in well at Australia’s largest food and grocery retailer.

Lion Nathan, now called Lion, is the single biggest supplier to the $90 billion food and grocery sector through its wide portfolio of fast-moving consumer brands including beer, wine, dairy, milk, cheese and juices.

However, since being appointed the Woolworths chairman in September, Mr Cairns has been quick to assure investors that the Woolworths’ board wouldn’t do a “John Fletcher’’ and name an industrialist as the next chief executive.

The remark refers to former retail conglomerate Coles Myer’s disastrous choice of John Fletcher as its new boss in 2001, after he had retired from running industrial services company Brambles.

Mr Fletcher oversaw a five-year decline in Coles Myer’s operations and profitability — it was eventually broken up.

When he was named CEO, he famously quipped that he hadn’t walked into a supermarket in 25 years.

Woolworths needs a leader with wide experience to replace outgoing boss Grant O’Brien.

The new boss will not only be ultimately responsible for more than 1000 Woolworths supermarkets but also a supermarket chain in New Zealand, struggling merchandise chain Big W, loss-making hardware group Masters and a portfolio of pubs and hotels.

This is why Mr Cairns and his board is warming to the possibility of widening its search beyond supermarket executives and considering a person who has held chief executive roles with globally recognised consumer brands.

In one meeting with investors, Mr Cairns said that he preferred an orderly handover from Mr O’Brien to the new Woolworths chief executive, meaning Mr O’Brien could stay beyond November — when he was likely to leave — and stay much longer after a new boss is appointed.

Mr Cairns told the institutional investor this could be “months, not weeks’’.

Meanwhile Mr Cairns and his board will face shareholders at the annual meeting in Sydney on Thursday.

There is likely to be some anger from the floor over Woolworths’ string of profit downgrades this year, worsening losses at Masters and, most worrying of all, slowing sales at its flagship Australian supermarkets arm, which drives more than 90 per cent of group earnings.