SA Director
Issue No. 8 - December/ 2002/january
Driving the Trolley and Shareholders Value at Woolies
Roger Corbett delivered a stimulating speech to the SA and NT Division of the AICD on October 23, 2002. He has been Managing Director and CEO of Woolworths Ltd since 1999 and before that held senior roles at David Jones and Grace Brothers. This is an edited version of his speech.
Australia has enjoyed about 11 years of ongoing prosperous growth, probably one of the longest periods of prosperous growth our country has ever experienced. I think that has to do with good management of fiscal and monetary policy but also good government in so many of our States, and it is good to see South Australia doing so well.
If you take Woolworths from 1998 through to the current period that has just been completed, you will see the business has grown from $16 billion to $24.4 billion. In the last period of time it has grown by 14.9 per cent, which by both Australian and international standards is a very strong growth pattern. That was an increase of $3.5 billion in turnover in the last 12 months. $2 billion came from the organic growth of the business in the main, with a few minor bolt ons.
The key factor in driving our volume has been through driving our costs down. A very interesting thing occurred in retailing in Australia. In the years leading up to 1998 our productivity norms in Woolworths (and in other retailers in Australia) were declining and we were becoming more inefficient, not more efficient. In fact our costs had continually grown as a percentage of our sales and we’d simply put our margins up. Our eager competitors were very happy to let prices climb and margins grow. From 1998 onwards the Board gave me a firm direction that I was to reverse that trend. Liking continuity of employment, I of course got on with the job.
We have actually reduced our cost of doing business from 23.95 in 1999 to 21.84 last year. In that period of time we actually removed from our costs $1.042 billion. We gave back to our customers $864 million in pr...
