Woolies continues to feel the chill

High Street veteran Woolworth's has posted a record £100m half-year loss and scrapped its dividend.

Last Updated: 06 Nov 2012

New boss Steve Johnson has wasted no time going on the offensive, despite having been in the job for only two weeks. On top of dumping the divvy he has announced his intention to scrap the firm’s final salary pension scheme (you mean it still has one?) cut jobs and engage in a ‘radical’ round of cost reduction. All of which is probably long overdue - the 99 year old retailer's results have been on the slide for years, as competition from more specialist stores put the squeeze on its 'variety' concept in all directions.

Deploying that old trick so beloved of politicians – blame the last lot - Johnson was not sparing in his analysis of the failings of predecessor Trevor Bish-Jones. He said that poor availability meant that at any one time 1,200 items were out of stock, and that while 54 different types of pencil could be found on the shelves, obvious basics like ladies tights could not. 

He has also canned Bish-Jones’ Big Red Book catalogue shopping wheeze and plans to focus his energies on saving money and reducing prices in store. ‘This is a business which has lost its way and become fixated on margins, allowing prices to drift up and eroding the roots of the Woolworth’s brand’ he told shareholders. He also said that now was not the time for complex strategies or fancy footwork but rather to focus on the basic details of good retailing and cost control.

All of which sounds eminently sensible and not before time – although the 10,000 final salary pension scheme members might not be so keen, and the news that job cuts can be expected will be equally unwelcome among the rest of the staff.

The only thing is, we’ve heard a lot of this sort of thing before from new brooms at Woolies over the years, and yet nothing much has changed. The much maligned Bish-Jones was himself the bright young hope six years ago, brought in after yet another fruitless attempt to turn the firm’s fortunes around by the management team before that.

Maybe Johnson can succeed where others have failed, but you have to say that the auguries are not good.

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