Big W – A Problem Child – A Job for AI

Woolworths released its Q3 sales commentary to the market today.
The executive, and there have been many, must cringe when they have to comment on the performance of Big W. I read through today’s announcement and have found it difficult to see a positive stat or trend.

It is not since the divisional management days of Roger Corbett, the late Dick McMorron, and (the still with us) David Perry that Big W has seen the sun.
It was in 1990 that Roger was appointed Managing Director he left for Woolworths in 1997.

I had the opportunity to work with all three of these gentlemen in my career and consider them to be amongst the best hardgoods merchants of the period.
Store walks with any of the three was a seriously scary event.

Numbers often just roll off the tongue, but there have been over 100 quarterly updates since 1997. It would be interesting to analyse how many of these had been positive vs negative commentary for Big W.

The Big W strategy has now become the retail equivalent of the Riemann hypothesis.

There have been, and still are some very talented people working in Big W that have good track records for execution. It must be the foundation strategy that is flawed.
None have resonated with the customer enough to elicit long term financial improvement.

Maybe it’s time to turn this conundrum into a job for AI – thoughts?

2 comments… add one
  • Alex Cochran May 2, 2024 @ 23:16

    I flicked the financial reports from Woolworths from 2016 – 2023 to Claude the new AI platform and asked:
    OK Claude here are the yearly financial results for woolworths from 2021 through to 2022. In each there is commentry about BigW. This is either positive, they beat thier financial budgets or negative. Can you give a table that lists the date, whether the commentry is positive or negative for big w and a summary of why it was positive or negative:
    Here is the response.

    2016 | Negative | BIG W reported a loss before interest and tax (before significant items) of $14.9 million largely due to lower sales and extensive clearance activity.

    2017 | Negative | BIG W’s loss before interest and tax of $150.5 million was extremely disappointing but also reflects the investment begun in the second half as they implement a new turnaround plan.

    2018 | Negative | BIG W progressed its turnaround in FY18. The loss before interest and tax (before significant items) for the year of $110 million was within guidance but still a loss.

    2019 | Positive | BIG W’s normalised sales increased by 4.2% in F19 with comparable growth in H2 remaining strong at 7.3%. The loss before interest and tax (before significant items) for the year of $85 million was an improvement on F18.

    2020 | Positive | BIG W’s total sales for the year were $4.1 billion, an increase of 10.5% on a normalised basis. BIG W reported EBIT of $39 million for the year, a $70 million normalised improvement on F19.

    2021 | Positive | BIG W had another fantastic year with improved customer scores and strong sales and EBIT growth. After sales growth of 20.1% in H1, growth moderated in H2 but remained positive at 2.3%. EBIT increased by over 300% in the year to $172 million.

    2022 | Negative | Despite a first half where many BIG W stores were closed for an extended period due to COVID restrictions, BIG W maintained strong customer scores throughout the year. Growth recovered strongly in H2 with Q4 sales growth of 11.9%. However, F22 EBIT of $55 million was 68.2% below the prior year largely reflecting the challenges in H1, with H2 EBIT of $30 million.

    In summary, BIG W’s financial performance was negative from 2016-2018, reporting losses each year. However, in 2019 and 2020 the commentary turned more positive, with strong sales growth and an improvement in earnings (though still a loss in 2019, returning to profitability in 2020).

    BIG W had a very positive year in 2021 with strong sales and profit growth. However, in 2022 performance was negatively impacted, especially in the first half, by COVID restrictions forcing store closures. While there was a strong recovery in the second half of 2022, full year profit still declined significantly compared to 2021.

    We live in a brave new world.

  • Graham McFarland May 3, 2024 @ 0:19

    A great read Alex! Yes I also had the opportunity of working with Roger, and especially Dick. Amazing operators, learned a lot from them on the floor!

    You seldom see this these days.

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