Ex-Focus boss takes on Woolies DIY job

Steve Johnson, the former boss of Focus DIY, has taken on the CEO role at Woolworths. Brave man...

Last Updated: 06 Nov 2012

Johnson, who ran DIY chain Focus for four years until June 2007, will join Woolworths in September as chief executive. He’ll be taking over from Trevor Bish-Jones, who announced his retirement in June after failing to arrest declining sales, and has a big job on his hands to restore the famous UK retailer to its former glory. All that DIY expertise might prove invaluable…

The 44-year-old Johnson looks well-equipped for the role on paper. With a background in retail (at Argos owner GUS and Asda) and management consultancy (at the Kalchas Group and Bain & Co.) he ought to know the industry inside out. More importantly, he has direct experience of a big turnaround job at Focus, where he successfully introduced a ‘renewal strategy’ to boost sales (by revising prices and store formats) and increase margins (by cutting central admin costs and overhauling the supply chain) at the struggling chain, which had been sold to US financial firm Cerberus for just £1.

Johnson, who says he will be ‘focused on value creation for all stakeholders’, will be under no illusion that life will be any easier at Woolies. In its most recent results, Woolies issued a profit warning after like-for-like sales fell by 6.7% in the six weeks to July 26, while margins were also down. Its shares are currently are about 70% down on their annual high, hovering around a measly 7p. And nobody seems totally sure what its role on the high street is these days.

So it’s clear that Woolies needs a turnaround of epic proportions. As chairman Richard North put it: ‘Steve... brings the strategic and operational skills that the Group needs to help it move to the next stage of its development’. And to make sure it actually has one, he may well have added under his breath...

In return, Johnson gets a basic salary of £550,000, plus an annual bonus of up to 50% of salary. He’s also on a ‘one-off incentive plan’, which could leave him with a bonus of 24m shares – equivalent to about three times salary – if he can get the share price to a (relatively modest) 20p within four years. Anything above 12p will guarantee him at least 40% of this bonus.

A big upside for such a modest ambition, you might think - but North will feel that if Johnson can reverse the downward trend in Woolies’ fortunes, his new CEO will be cheap at twice the price...

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