Woolworth's market capitalization is downcast around a third since mid-2014, which quite a success for a company which once worth almost AU$50 billion.
John Rice, Professor of Management, University of England and Nigel Martin, Lecturer, College of Business and Economics, Australian National University, said via The Conversation that the company's shareholders have had a sweltering couple of years. As matter of fact, it announced a 35% fall in half-year profit, sending its shares plummeting by more than 9% as of press time.
John said that the catastrophic Masters foray is relatively to blame. "Conceived in oligopolitical hubris, Mastershas been an unmitigated disaster for Woolworths shareholders. They were right to expect far better from the company's exceedingly well-remunerated board and senior executives," he said in the report. "The fact that Masters has ended quite a few careers is cold comfort for shareholders who have lost hard earned savings and superannuation."
He added that partial success of this "Aldification" of Woolworths store has done harm to its fundamental business of groceries. "Whenever consumers choose the low cost goods within Woolworths, it is at the expense of the higher margin goods they also have for sale. This is evidenced by the steep decline in margins reported today - with sales in slight decline (2.5%) and projected earnings in free fall (28 to 35%)," he stated in the report. "Woolworths is learning the hard way that while revenues are easy to lose, the same can't be said for the fixed costs involved in running a national retailer."
To recall, Food World News previously reported that that Aldi will continue its rial new-look modern stores across Australia. The trial now included a Manly (NSW) store which joins other test stores in Chisholm (ACT), Highton (VIC), McGratchs Hill (NSW) and Kallangur (QLD).
An IBISWorld report in July 2015 has estimated that Aldi will have had an AUD $6.9 billion revenue by the end of the year. Meanwhile, Aldi confirmed last month that it wuld be opening a new store in Mentone, Victoria.
