It's a no-brainer.
The board at Woolworths Limited (ASX: WOW) was always going to be put on the chopping board with this happening…
Source: Yahoo! Finance
One year on and two profit downgrades later, the Woolies boardroom is expected to undergo significant changes following the announcement of the resignation of CEO Grant O'Brien.
Indeed, Fairfax Press today reported that Woolies Chairman, Ralph Waters, is believed to have also brought forward retirement plans to make way for a fresh executive team.
It says Origin Energy Ltd (ASX: ORG) Chairman, Gordon Cairns, and National Australia Bank Ltd (ASX: NAB) deputy chief executive, Michael Ullmer, are plausible replacements for Mr Waters.
Fairfax says that of the shareholders it contacted, Mr Cairns was the preferred choice.
Time for change
It doesn't really matter who takes the reigns as CEO or Chair, so long as they have a viable strategy in place to resurrect the retailer's two potentially biggest drivers of earnings: Supermarkets and Masters.
Woolworths supermarkets have been losing out to a resurgent Coles – owned by Wesfarmers Ltd (ASX: WES) – while Masters continues to post steep losses.
Are Woolworths shares a buy?
Like all retailers, Woolworths' current strategy is to grow same-store sales (SSS), while stripping away unnecessary operating costs.
However, as a $33 billion behemoth, investors must have utmost confidence in their management team to implement a well-thought-out plan because it'll take time to achieve and – as can be seen above – is sure to produce some anxiety for shareholders.
Personally, I hold a large amount of Woolworths shares in my portfolio, but if I were an investor running the ruler over the stock today, I'd be patient. Wait for tomorrow's results and keep a keen eye on profit margins, cost-cutting and strategic commentary for both Masters and the Supermarkets business.
