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Investors in Woolworths Group Ltd (ASX:WOW) are likely feeling the strain as the supermarket operator faces a challenging year. The Woolworths share price has dipped by 5% in 2024 and is down over 6.5% in the past 12 months, contrasting sharply with the S&P/ASX 200 Index, which has surged more than 14% during the same period. Adding to the concern, shares of rival Coles Group Ltd (ASX:COL) have increased by a striking 22% in the last year.
Woolworths has grappled with various setbacks that have weighed heavily on investor sentiment. The recent departure of CEO Bradford Banducci raised questions about the company’s strategic direction, and disappointing financial results have highlighted a concerning trend: Woolworths appears to be losing market share to Coles, further exacerbating the disparity in share price performance.
In light of these challenges, some investors are advocating for significant changes at Woolworths. Reports indicate that major stakeholders are calling for the company to divest its struggling Big W discount chain and its New Zealand operations, concentrating instead on the Australian food segment.
Dushko Bajic, a portfolio manager at First Sentier Investors, recently met with new Woolworths CEO Amanda Bardwell and emphasized the desire for the company to simplify its operations. He suggested that Woolworths should eliminate Big W, arguing that it has “just destroyed capital.” Bajic also critiqued the New Zealand expansion, likening it to the company’s ill-fated Masters hardware chain that lost billions. He urged Woolworths to reinvest in its core business and leverage its advantageous supermarket locations.
Ray David, a portfolio manager at Blackwattle Investment Partners, echoed these sentiments, advocating for a restructuring that could include selling off New Zealand stores. He believes that Woolworths should harness its scale and logistical capabilities to enhance its focus on the Australian market. David noted, “Sometimes the essence of strategy is choosing what not to do,” highlighting the benefits of a streamlined approach.
However, not all investors share this view. One anonymous stakeholder contended that Woolworths should remain committed to its New Zealand operations, pointing out that limited competition in that market could provide long-term benefits.
