2nd UPDATE: Woolworths CEO Luscombe To Retire; Replaced By O'Brien
04 Aprile 2011 - 8:37AM
Dow Jones News
Woolworths Ltd. (WOW.AU) Chief Executive Michael Luscombe is
ending a five-year tenure at the helm of Australia's biggest
retailer, passing the baton to a senior executive in its key
supermarkets division.
Following months of speculation of an imminent retirement,
Woolworths said Luscombe will stand down at the end of September,
when he will be replaced by food and gasoline Chief Operating
Officer Grant O'Brien.
It's still unclear whether O'Brien's appointment will mark a
change of strategy for Woolworths, although the company's selection
of a 12th internal successor may suggest that there's no dramatic
change afoot. Most analysts at least agree that his work setting up
a joint venture with Lowe's Cos. (LOW) indicates that Woolworths
wants to grow its fledgling home improvement store offering.
Luscombe wasn't available for comment Monday and O'Brien said in
a statement that he intends to "continue Michael's legacy".
Talk of Luscombe's future was sparked in February by a media
article quoting him as suggesting that there's more to life than
being a public figure.
A month earlier Woolworths downgraded its annual earnings
guidance in response to waning consumer confidence, partly hampered
by higher interest rates designed to cool Australia's booming
resource sector-driven economy. Shares in Woolworths and
discretionary retailers including David Jones Ltd. (DJS.AU) and
Harvey Norman Holdings Ltd. (HVN.AU) have slipped substantially
since October despite a gradual rise in the wider Australian
market.
The new CEO will also have his work cut out resisting a
resurgent Coles, which is winning back market share as a turnaround
strategy initiated by Wesfarmers Ltd. (WES.AU) after it bought
Coles in 2007 gains momentum.
Woolworths supermarkets boss Greg Foran was considered a likely
successor to Luscombe, so investors could be a little surprised
that O'Brien got the top job instead.
Still, the 49-year-old Tasmanian-born O'Brien has 24 years
experience at Woolworths and currently sits on its management
board.
He set up Australia's first supermarket loyalty scheme, and
developed the company's liquor strategy.
O'Brien's experience setting up the Lowe's deal shows that the
board is committed to the hardware store venture as the company's
next growth platform, said Angus Gluskie, a fund manager at White
Funds Management.
"The replacement seems to be someone who's reasonably OK with
Luscombe's strategy, which suggests it's more an appointment that's
going to keep things running in very much the same way," Gluskie
said.
Still, one analyst from a large global investment bank noted
that while Foran has experience in all of Woolworths major
divisions, O'Brien's experience is mostly in supermarkets and group
strategy.
"This would tend to suggest that their future growth is going to
be more coming out of new business than existing business," the
analyst, who wished to remain anonymous, said.
While home improvement is an obvious growth path, "it will
probably extend further than that", the analyst said, adding that
Woolworths could reconsider expanding overseas, given the
competition concerns of local regulators.
-By Ross Kelly, Dow Jones Newswires; 61-2-8272-4692;
Ross.Kelly@dowjones.com
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