Wesfarmers Keen To Stop The Rot After Disastrous Year For Coles
Sydney Morning Herald
Thursday September 13, 2007
WESFARMERS will try to make up for lost time at Australia's second-biggest retailer by fast-tracking the mammoth task of fusing the supermarket chain and its Bunnings hardware stores.
The pair yesterday set in motion the wheels of change by putting together a group of top executives to start work even before Wesfarmers has the keys.After a disastrous year in which the $18 billion Coles Group retail empire has lost ground against rival Woolworths, Wesfarmers is keen to stop the rot.Wesfarmers' fertilisers divisional chief, Keith Gordon, in his new role of business integration director, is to head a nine-member committee tasked with planning how the diverse conglomerate and the retailer will work together.Coles's chief executive, John Fletcher, is also returning to a hands-on role in retailing after six months acting as chief auctioneer.The committee has five members from Melbourne-based Coles and four from Wesfarmers.The move comes a week after Wesfarmers gained Coles board support for its cash and stock offer after promising to top up the bid if its shares do not rebound. Coles shareholders are set to vote on the takeover in November.The committee will identify where the new company can save money, start on Wesfarmers boss Richard Goyder's plan to replace up to 75 per cent of the top 200 Coles executives, and continue to prune head office staff.Mr Gordon joined Wesfarmers eight years ago from a rival seed, grain and biotechnology company, IAMA. He became general manager of Wesfarmers SeedTech, went on to manage Wesfarmers' business development unit, and then joined the CSBP fertiliser and chemical division three years ago.The restructure of Coles's business is aimed at turning Coles supermarkets, liquor, petrol and general merchandise stores into a profit powerhouse similar to the Bunnings hardware chain which is the country's third-largest retailing business.Bunnings and Officeworks will be run together, leaving Target as a single division and keeping supermarkets alongside petrol stations and bottle shops.The future of Kmart, which has failed to match profits made at rivals Big W and Target, is under a cloud and it may be put to auction. The committee will examine where to slash costs and staff numbers, with $925 million in costs to be removed by 2013. Of this, $540 million is to come from supply chain savings in the supermarkets, bottle shops and convenience stores, and $385 million by reducing overheads.Since the deal was announced in July its value has fallen from $21.5 billion to $18 billion. It now sits just a whisker above the $17 billion takeover of Rinker by the Mexican cement giant Cemex. Wesfarmers shares closed down 15c to $38.75; Coles shares rose 1c to $14.56.
© 2007 Sydney Morning Herald
