Woolworths defends Masters

 

mastersWoolworths chairman, Ralph Waters, says he is frustrated by impatient investors complaining about startup losses on the retailer’s Masters home improvement business.

Waters has also mounted a spirited defence of the decision to sell electronics chain Dick Smith, telling investors at Woolworths’ annual general meeting they could buy into the business when its new owners float it if they like it so much.

The Woolworths chairman said the attitude of investors in Australia and New Zealand to its Masters venture was “a little frustrating”.

Masters lost $157 million in 2012/13, more than the $119 million forecast by the company, and is not expected to break even until 2016.

“As a former CEO I used to suffer this as well,” he said.

“I would go around the world and visit investors and the longer term vision of people overseas was quite starkly noticeable, compared to the impatience of investors in Australia and New Zealand.

“We have just started a business from scratch that is only a couple of years old and has grown to a billion dollars turnover.

“Yes we’ve got a lot of start-up costs and we’ve got a lot of supply chain costs that are not yet shared by the ultimate number of stores.

“People are being impatient about a business that is two years old.”

Waters also answered questions about the decision to offload Dick Smith for $94 million to a private equity firm, which will soon float the restructured business at a value of over $500 million.

“If we had wonderful vision and knew that today the dollar would be worth 92 cents not the 105 cents it was when we made the decision, we might have had paused for a moment to say `well maybe Dick Smith will be a bit more profitable if we left it for a year or two’,” he said.

However Waters said the decision had been made to exit quickly and cleanly from the business to focus on Woolworths’ core strategy.

“If you really like it enough you can invest in the new IPO,” he said.

Waters said he wished the Dick Smith IPO all the best but had “no embarrassment about the decision we made”.

Woolworths CEO Grant O’Brien used the meeting to call on supermarket competitors to sign up to the voluntary code of conduct agreed to by Coles and Woolworths this month.

“It’s now time for Aldi, Costco and IGA to join the conversation. There is no logical reason for these parties to exempt themselves from participating,” O’Brien said.

Also at the meeting, Woolworths chief financial officer Tom Pockett announced his resignation from the company after 11 years.

Pockett will retire next February and be replaced by David Marr, who is currently the GM of corporate finance.

AAP

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