Shares in major retailer, Woolworths hit and closed at an all-time high of $39.68 yesterday after CEO Brad Banducci and chairman Gordon Cairns announced they would have their pay packets docked for the 2019-20 financial year in response to the company’s $300 million underpayments of many of its managers.
Supermarket giant and one of Australia’s largest employers Woolworths has underpaid nearly 6,000 of its employees close to $300 million dollars due to non-compliance with the industry award over the past decade.
Signs of investor worries about the first quarter trading performance of our two biggest retailers - Woolworths and Coles which are both due to update the market this week on how they went in the three months to the end of September.
Credit Suisse assesses a de-merger of Endeavour Drinks would enable a reinvestment strategy independent of Woolworths. Hotels & liquor retail generate lower returns on capital than the supermarket business.
Credit Suisse considers the stock expensive relative to valuation, which drives an Underperform rating. A lack of operating leverage in the FY19 result and cost headwinds appear to be incrementally negative, and the result was marginally below forecasts.
German competitor Kaufland is looking to start a battle for its share of the Australian households' wallet and Citi thinks this will act as a catalyst for a resumption of an industry-wide private label price war.