Owners of Woolworths Group Ltd (ASX: WOW) shares are probably not too content right about now.
It's been a tough year for the supermarket operator. The Woolworths share price is down by 5% in 2024 so far and more than 6.5% lower over the past 12 months. At the same time, the S&P/ASX 200 Index (ASX: XJO) is up more than 14% since this time last year.
Perhaps even more jarring for Woolworths share owners has been the Coles Group Ltd (ASX: COL) share price, which has risen by a huge 22% over the past year.
Woolworths has suffered a series of setbacks that have clearly dented investor confidence. The less-than-graceful exit of CEO Bradford Banducci this year has raised eyebrows, as have Woolworths' lacklustre financials, which indicate the company is losing market share to Coles (hence the share price performance disparity).
As such, it's understandable that Woolworths investors might be feeling less than happy right now.
So much so that some investors are reportedly calling for some big changes at Woolies.
Image source: Getty Images
Investors call for a "shrunken" Woolies
According to the Australian Financial Review (AFR), "major investors" are calling for big changes at Woolworths. These changes revolve around the proposal that Woolies drop its struggling Big W discount chain and New Zealand division to focus solely on the Australian food segment.
The report quotes First Sentier Investors portfolio manager Dushko Bajic's views. Bajic reportedly talked to the new Woolworths CEO Amanda Bardwell at a recent meeting and told her, "We would just love you to be a simple Australian supermarket".
He also expressed his hope that Woolworths would ditch the Big W business, arguing that it had "just destroyed capital".
Bajic also argued that Woolies' New Zealand expansion was a mistake, stating that "It was a bit of ego and arrogance from Australians who think they can do better".
He compared it to Woolworths' ill-fated Masters hardware chain, which folded a few years ago, pointing out that "they dusted a couple of billion dollars when that ego projection happened as well."
Bajic said that the company should "reinvest back into your business and your prices and make the most of your superior supermarket locations, which won't be able to be matched by your competitor" instead.
Ray David, portfolio manager at Blackwattle Investment Partners, was also quoted as arguing for a Woolworths restructure. David argued that Woolworths could sell off its New Zealand stores in order to simplify the business:
In theory, Woolworths should be the superior business given its scale, greater network density and control of end to end online logistics fulfilment…
We are advocates of simpler leaner business, as sometimes the essence of strategy is choosing what not to do, and we would welcome any strategy that simplifies the business that brings a greater focus on the core.
Should Woolworths shares stay the course?
However, one other Woolworths investor, speaking anonymously to the AFR, disagreed. They put forward that Woolworths should "stick it out" in New Zealand, arguing that limited competition bodes well for the company in the long term.
We'll have to wait and see whether the new Woolworths CEO charts a new course for the company soon.
