Restructuring Woolworths Group Plc. - The Attempt that Failed
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Case Code: BSTR323 Case Length: 19 Pages Period: 2001-2008 Pub Date: 2009 Teaching Note: Not Available |
Price: Rs.300 Organization: Woolworths Group Plc. Industry: Retail Countries: UK Themes: Restructuring, Turnaround Strategies |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Restructuring at Woolworths
After the demerger, Woolworths launched a program to reduce debt, clear the excess stock, and generate cash for business recovery. The program was planned to be implemented in three phases...
Strengthening the Supply Chain
The strategy relating to strengthening the supply chain and infrastructure involved inculcating in-store discipline, reducing supply chain costs by implementing better systems infrastructure at the company's head office, and ensuring better product availability at its stores to meet the seasonal and regular demand...
Simplifying the Business
Simplifying the business comprised rationalization of the existing four formats under which Woolies stores operated and which the management had perceived as complex and costly...
The Fall Begins
In the fiscal 2005-06, Woolworths' retail business, Woolies, began to feel the impact of the sluggish business environment and the high costs associated with its restructuring program Consequently, Woolies reported a lower net profit of £ 17.1 million as compared to net profit of £ 39.8 million in fiscal 2004-05 (Refer to Exhibit V for the performance highlights of retail segment of Woolworths' Group Plc between fiscal 2004-05 and 2007-08)...
Woolworths in the Red
Woolworths reported a half yearly loss of £ 90.8 million for the first half of 2008-09, as against £ 64.3 million in the corresponding period of 2007-08. Retail sales declined by 5 percent from £ 695.6 million in the first half of 2007-08 to £ 660.7 million in the first half of 2008-09 and third party sales of the entertainment wholesale and publishing business also declined by 1 percent to £ 416.8 million during the first half of 2008-09. While both divisions posted operating losses, the group adjusted net loss posted was mainly on account of the loss recorded by the retail division during the first half of £ 59.2 million in 2007-08 and £ 75 million in 2008-09...
The Aftermath
Some analysts debated whether businesses like Woolies and EUK that had vast potential, could have been turned around if they had been handled judiciously. Ardeshir Naghshineh, Woolworths' largest shareholder that held 10 percent equity stake in the company, too felt that the closure of Woolies was "unnecessary."...
Exhibits
Exhibit I: Financial Highlights of Woolworths Group Plc. (2001-08)
Exhibit II: Interim Financial Highlights of Woolworths Group (26 Weeks Ended on August 04, 2007 and August 02, 2008)
Exhibit III: Net Debt Obligations of Woolworths Group (As Of February 02, 2008 and August 02, 2008)
Exhibit IV: Chart Representing Segment Revenues of Woolworths Group (26 Weeks Ended On August 04, 2007 and August 02, 2008)
Exhibit V: Financial Highlights of Woolies (2005-08)
Exhibit VI: What Woolies Meant to the British
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