Big W's survival - and 22,000 jobs - no longer guaranteed
THE shock resignation of BIG W chief executive officer Sally Macdonald has prompted speculation that the Woolworths-owned retail giant's survival is not guaranteed.
Big W operates 184 stores throughout Australia and competes head-to-head with Coles' owned K-Mart stores.
It employs about 22,000 staff nationally and through Asia.
Analysts are now questioning if Ms Macdonald's departure - less than 12 months after her appointment in January - highlights bigger intentions for the retailer.
Woolworths chief executive Brad Banducci said Ms Macdonald had made progress in restructuring the business and reducing costs but that "the transformation of Big W will take three to five years to complete".
"Unfortunately, this time horizon is inconsistent with Sally's expectation when she joined Big W."
In the aftermath of Woolworths offloading its hardware chain Masters, questions are now being asked about the future of Big W.
Retail analyst Steve Kulmar told Fairfax Media he didn't buy the explanation.
"Obviously something has happened internally but the whole discount department store market is an endangered category, with the likes of Amazon and the broader push for convenience pricing," he said.
In September, Amazon was understood to be hunting around Sydney for warehouse space large enough to cater for its enormous supply chain.
Fairfax also quoted an unnamed analyst who said there was "no doubt they want to sell this business".
"The only issue is the attitude of (Woolworths chairman) Gordon Cairns and his view that Woolworths needed to get the business performing at an adequate level before selling it."
It is not the first time Big W's sale has been up for discussion.
In June, South African retial giant Steinhoff - which owns Best & Less - was reported to be in talks with Woolworths about buying the discount department chain.
There were suggestions at the time that Woolworths would try to "package" Big W with Masters in an effort to score a better deal for the pair.
A spokesman from the company was tight lipped on the issue when approached by ARM.
"Woolworths is committed to the long-term success of BIG W," the spokesman said.
"BIG W is an important part of our Group's offering to our customers.
"We won't comment on market speculation."
Woolworths confirms resignation of Big W chief executive Sally Macdonald:
Wednesday, 16 November 2016: Woolworths has today announced that Sally Macdonald has resigned from her role as Chief Executive Officer of BIG W. Ms. Macdonald joined BIG W in January, 2016.
David Walker, who became the CEO of Woolworths' Home Improvement businesses in February 2016, will transition to BIG W as acting CEO.
Mr. Walker has 18 years of retail experience, including a previous role at BIG W in Supply Chain transformation. Ms. Macdonald will support Mr. Walker during this transition.
Brad Banducci, Chief Executive Officer and Managing Director, said: "Since joining BIG W in January 2016, Sally has made material progress in restructuring the business, especially in the areas of direct sourcing, product development, supply chain, business simplification and cost reduction.
However, despite these and other positive changes, it is apparent that the transformation of BIG W will take three to five years to complete and, unfortunately, this time horizon is inconsistent with Sally's expectation when she joined BIG W".
We look forward to continuing the momentum of change at BIG W, with a continued focus on BIG W's long-term success", Mr. Banducci said.