It’s not often that a CEO openly acknowledges self-inflicted challenges, yet Woolworths CEO Roy Bagattini exudes confidence that the struggles of the company’s clothing division are merely temporary hurdles and less of a catastrophe.
Bagattini would have us believe that everything is under control — and he might be on to something.
“Why have the FBH division at all?” some critics cry. “Focus on the food business.” But wait, don’t they sing a different tune when the fashion segment performs well?
Bagattini rightly points out that the fashion business is poised for a comeback thanks to a R1.5bn investment and strategic overhauls.
The past six months were rough, to be sure, but the segment grinds about 14% profit margins. That’s more than twice as much as it used to notch in 2020, for example.
It’s one thing to report double digit sales growth but it’s quite another if the money does not flow to the bottom line because consumers only visit the stores to buy marked down goods.
What we saw in the past six months is nothing but growing pains. A self-inflicted wound due to supply chain transformation that temporarily gummed up the works.
The fashion makeover is taking shape and Bagattini’s efforts could very well turn this temporary setback into a long term success story.
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