Retail major Woolworths has awarded CEO Roy Bagattini an open-ended contract with the group’s outgoing chair saying working with him has been one of the highlights of his 10-year tenure on the board of the R66.8bn company.
“Another highlight has been working with Roy Bagattini, our Group CEO, and I enjoyed the many meaningful conversations we’ve had about this legendary business and keeping it future-fit. Woolworths is an exciting business, managed and operated by many unique, dedicated people who are deeply passionate about the group,” chair Hubert Brody said in his letter to shareholders published in the group’s annual report.
“I am also delighted to advise that Roy’s employment contract, which was initially a fixed-term agreement, has now been extended without a specified end date. Roy’s relentless drive to execute the group’s strategic plans and key initiatives is much appreciated by the board and I wish him continued success.”
Bagattini, 60, has been in the role since 2020, replacing Ian Moir, who was criticised for the value destruction caused by the purchase of Australian operation David Jones for more than R20bn.
Before joining Woolworths, Bagattini was with Levi Strauss & Co, where he was executive vice-president and president of Americas. Before that he served as the president of Asia and Africa for the Carlsberg Group.
Bagattini said in his letter to shareholders that one of the milestones of the 2024 financial year was the completion of the sale of David Jones last year to private equity fund Anchorage Capital Partners.
“Arguably one of the biggest milestones for us this past year was concluding the David Jones transaction. This transaction not only turned out to be well timed (given the downturn in the Australian macro) but, more importantly, has been transformational for our group in removing R21bn in liabilities from our balance sheet,” he said.
“Very pleasingly, we have now successfully completed the highly complex operational separation of CRG [Country Road Group] from David Jones — both on time and within budget — and while an element of stranded cost remains to be rationalised, this is being more than offset by the rental income received from the Bourke Street property, which we have retained. Importantly, CRG is now unencumbered to focus exclusively on the strategies that underpin its growth ambitions.”
The group reported a 17% drop to 352.3c in annual headline earnings per share in the year ended June, blaming the macroeconomic environment, which deteriorated across both SA and Australia.
A final dividend of 117.5c per share was declared, a 23.9% decrease. Turnover and concession sales increased 6.2% and 5.6% on a constant currency basis.
Under Bagattini, the group has expanded its offering to areas such as high-end liquor, a stand-alone beauty offering and pet care, while revamping the look and feel of its market leading food business.
Bagattini said these are areas where they see growth.
“We have also identified a number of adjacent categories and formats within our Food business, where we see significant growth potential, including our WCafé, coffee carts and NowNow formats (Food Services), WCellar and pet care. To enhance the focus on these key growth segments, we launched WVentures during the year — a specific business unit designed to accelerate new revenue streams, harness the potential of our talented people and attract new customers to our trusted brand,” Bagattini said.
“We recognise that growing a world-class food business requires ongoing investment. To this end, we are investing R1.7bn in the expansion of our Midrand distribution centre over the next three years, which is vital in supporting future growth and is further evidence of the potential we see in our food business.”
The Woolworths board said it continued to review the group’s succession plan for all executive leadership roles, including the CEO position itself.
“Bagattini’s fixed-term agreement has been extended without a specified end date, with a six-month notice period, reducing to three months in specified instances,” the annual report reads.
“We have also evaluated ongoing initiatives aimed at investing in and retaining top talent, as well as nurturing internal talent growth. These efforts are crucial to ensuring continuity in executing the group’s growth strategy and preventing instability during leadership transitions.”
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