Woolworths group chief executive officer (CEO) Ian Moir took home a salary of R19 million despite a continued slowdown in earnings in the retail sector.
“South Africa experienced another challenging year as the ongoing challenges faced by the country continued to dampen consumer and business sentiment and growth. Consumer spending, specifically, faces additional pressure due to high unemployment, lacklustre income growth, weak credit extension, and escalating costs of living,” Moir said in August when the group reported its financial results for the 53 weeks ended June 2019.
“Despite this, Woolworths delivered a good set of results, with total sales growth of 5.8% and profit growth of 2.5%,” he said.
The group’s biggest headache remains David Jones, in Australia. Moir told Bloomberg last month that his critics had a point when they said he made a mistake with a $2 billion swoop for the business five years ago.
“They were right,” he said in an interview at the time. “I regret the price, and buying it at that time – hindsight is a wonderful thing – but I think we have a great asset now.”
Moir, a 60-year-old Scot, acquired David Jones hoping to create a southern hemisphere-wide giant offering upmarket food and clothing. The move began to unravel through a string of changes – notably a head office move to Melbourne from Sydney that required about 75% of the workforce to be replaced.
Two writedowns of the business followed, most recently earlier this month. New IT systems, an online launch and a A$400 million ($270 million) refurbishment of a flagship store on Elizabeth Street in Sydney have caused further disruption, Bloomberg noted.
“We should have done less over a longer period — but the benefit is we are pretty much through it now and in a better place as a business,” he said in his top floor office on Thursday.
“We’ve got 20% still to go, but I do feel we are through the worst.”
Moir told Bloomberg that he considered quitting. “But I thought it would be entirely irresponsible,” Moir said. “Falling on your sword is always the easy thing to do. I’m doing what I should do – taking responsibility for getting it right.”
Such is the challenge at David Jones, that Moir has relocated to Australia to help turn around the struggling business.
Moir’s total guaranteed salary for 2019 is roughly the same as in 2018, however, a year ago he picked up total remuneration of R30.5 million which included long-term incentives.
His total remuneration of R23 million in 2019 accounts for almost half of the R50.1 million paid out to the group’s South African executive team in 2019 – or R70 million including the R19.7 million paid (in Australian dollars) to former Woolworths Australia CEO, John Dixon.
The group paid out R16.4 million to non-executive directors, bringing total director pay to R86 million.
Moir’s pay comprised a basic salary of R18.9 million, benefits of R142,000 and dividends paid out to the value of R3.99 million. The chief executive did not receive a performance bonus, which is tied to the group’s financial performance.
He does, however, still hold shares in the group, worth R35 million.
Woolworths South Africa CEO, Zyda Rylands, earned R11.97 million, including a basic salary of R8.2 million, benefits of R465,000 and a performance bonus of R2.1 million.
Group financial director Reeza Isaacs received R6.8 million, while group chief operating officer Sam Ngumeni was paid R8.27 million.
For the 2019 financial year, Woolworths said that challenging economic and trading conditions in both South Africa and Australia continued to weigh on its financial results.
Despite reporting a 6.5% jump in revenue, and a 6.1% increase in turnover and concession sales, headline earnings per share declined to 342.9 cents per share, from 346.3 cents per share before, while adjusted headline earnings per share declined by 2.1%.
The group had written down the value of its Australian chain David Jones by A$437.4 million, reducing its valuation to approximately A$965.0 million.
South Africa’s operations were boosted by its fashion business as well as an increase in digital sales, however food continued to be the real hero as sales increased by 7.7% for the year, with second half growth of 9.0%.
Woolworths share price has recovered in recent months, however, it is some way off its 2016 peak.