Woolies not planning to change targets

Posted by Daniel Palmer on 2nd March 2009

Woolworths, Australia’s largest supermarket operator, is not expecting to lower their guidance despite economic headwinds, as they remain positive after reporting a record first-half.

“One of the things we did when this first erupted, we determined a couple of things. Number one, let’s not change our targets, so our guidance has been the same even though we set those back in March last year for ourselves, we haven’t changed them,” Woolworths CEO, Michael Luscombe, told ABC’s Inside Business program. “Number two, it was going to be important for us to remain confident and to remain very positive about our business and to accelerate the investment in our business and in our people and delight our customers.”

“We also said that we need to have contingency plans should the real unexpected happen. So each of our businesses actually did contingency plans which said x, y and z,” he reported. “When we looked at them we said, ‘Well, hold on, there are a couple here that actually make sense, even now, so let’s start on those’. And they’re under way at the moment.”

The company is looking closely at cost-cutting measures but not planning any redundancies. “If we need to stop doing that job, we need to find another job, re-deploy them elsewhere in the business, and we need to invest in new business so that we can continue to grow our people,” Mr Luscombe said. Last week, the company advised that they would be creating 7000 new jobs in the second-half of the 08/09 financial year.

Mr Luscombe has been satisfied with the stimulus packages to-date, believing the Government’s focus on retail will serve the economy well.

“I think the Government has actually got a good range of immediate fiscal stimulus, because they clearly saw if consumer confidence and spending drops, then the multiplier effect through the economy is going to be pretty dramatic,” he suggested. “There’s no doubt that the Government has looked at the retail industry and seen that whilst it is also the biggest employer of all sectors, that a dollar sale actually has a lovely flow on and an immediate effect, because, you know we sell a box of Corn Flakes, you know, we need to get one made and we need to get one delivered. And the multiplier effect is very strong.”