Gerald Corbett, the former chief executive of Railtrack, was at the centre of a fresh corporate calamity yesterday when Woolworths, the high street retail chain he now chairs, issued a profits warning because of poor Christmas sales.
The weak trading performance was in stark contrast to most other stores groups, which enjoyed a bumper Christmas during the biggest surge in consumer spending since the late 1980s.
But Woolworths appears to have missed out through a combination of internal mistakes and increasing competition. Its sales over the Christmas period were 3.5 per cent lower than last year.
To help sort out the problems, Mr Corbett has brought in a new chief executive – Trevor Bish-Jones, managing director of Currys, which is part of the Dixons group. Mr Bish-Jones has been offered £375,000 a year and share options worth three times his salary.
Mr Corbett, who is paid the same wage, plans to step back into the role of non-executive chairman later this year. The role will initially involve three days' work a week, eventually dropping to two.
He denied yesterday that Woolworths was another corporate failure. "Rome was not built in a day," he said. "The priorities we set out when Woolworths was demerged [from the Kingfisher retail group last August] was to reduce stocks and pay down debts. We've done both ... though at greater cost than we'd expected."
Woolworths miscalculated on some best-selling lines, such as the Sony PlayStation 2, which sold out in mid-December. It also under-estimated the popularity of DVDs, failing to stock sufficient quantities of titles such as Pearl Harbor and Bridget Jones's Diary.
In other departments it found rivals were taking market share. It lost confectionery sales to the supermarkets, which, along with specialist retailers such as HMV, also performed strongly in the DVD, video and CD sector. There was strong competition on Christmas decorations, which were sold in great numbers by DIY chains such as B&Q and Homebase. Woolworths also suffered from the sharp fall in mobile phone sales, down by about 50 per cent on 2000.
Mr Corbett surprised the business world last year when he took on the Woolworths job. It came only a few months after he left Railtrack, amid the rail network's descent into chaos after the Hatfield crash. Mr Corbett departed with a pay-off of £1.4m, including pension rights. He said he had no regrets about taking the job. "I'm happy at Woolworths and I'm looking forward to being a traditional chairman later this year."
Although Woolworths shares fell 5.5p to 37.25p yesterday, they were still well up on the 25p level at which they started trading in August, Mr Corbett said.Reuse content