Coles’ Durkan cool under pressure

John Durkan is locking in his defence against increasing market challenges, but shows no hint of the pressure he is under.

18/11/2015 CEO of Coles John Durkan in the biscuit isle of their store in Tooronga village in Melbourne. Aaron Francis/The Australian

Coles boss John Durkan is showing no signs of the pressure he is under, as Woolworths gains momentum — at least on the stock market — with its share price up some 14 per cent since a recent low on December 6. In comparison, Wesfarmers is up just 1 per cent over the period.

In an interview with The Australian Durkan declined to acknowledge after spending $1 billion on pricing cuts that Woolworths momentum had improved.

The market, he said, was competitive and “Australians consumers have never had it better.”

Even saying this he said consumer confidence was still fragile.

The key metric in the sales figures to be released in the next few weeks is same store sales and Woolworths is benchmarking its performance against negative 1.2 per cent in the second quarter last year, while Coles’ numbers compare to last year’s 4.9 per cent growth.

This makes it easier for Woolworths to outperform but even saying that it has to achieve sales growth of at least 1.2 per cent to show growth over the last two years.

Durkan does concede the “market is tougher” but declared “we are not changing anything.”

He does not believe Woolworths is selling a basket of goods any cheaper than he is and will continue to concentrate on lower prices, better availability and better quality.

Durkan underlined his commitment with a series of management changes unveiled today which also serve to lock key people into the team.

These include Simon McDowell, who will become chief customer officer, Leah Weckert who will be in charge of people and culture, and George Dymond and Andy Coleman who will join Chris Nicholas in charge of merchandising.

Alister Jordan has had his duties extended from corporate affairs to online shopping ($700 million in sales) to convenience ($6.5bn).

Former BCA chief economist Peter Crone will assume more responsibility within corporate affairs as Jordan extends elsewhere.

Durkan clearly wants to show he is not just sitting around doing nothing and this message is being sent to the market as the bandwagon builds behind Woolworths.