Woolworths announces executive pay cuts of up to 30{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} in bid to support staff
Woolworths [JSE:WHL] has followed in the footsteps of international companies like Disney and British Airways to announce that its directors, Group CEO and senior executive managers will forego up to 30{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} of their fees and salaries over the next three month as foot traffic and general sales volumes plunge due to the coronavirus (Covid-19) lockdowns.
This comes as South Africa enters the 11th day of a 21-day nationwide lockdown to stem the spread of the virus. Only essential retailers, which includes the food division of Woolworths, can trade during the shutdown.
The retail group, in a trading update on Monday, said savings from cuts will be used to provide financial support to staff who find themselves in “extreme hardship”.
Woolworths, which has operations in 11 other countries on the continent as well as in Australia and New Zealand, said that in SA the majority of its food stores remain open. In the period immediately prior to the lockdown, it saw “unprecedented demand on specific products that consumers considered essential”. This demand has begun to moderate, however, as “shopping patterns are re-set and as confidence in the food supply chain grows”.
Food sales in the four weeks to the end of March increased by 27.6{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} on the prior comparable period, it said.
The temporary closure of the Fashion, Beauty and Home stores, which don’t fall under essential services, saw local sales in the four weeks to the end of March declined by 27.8{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} compared to March last year. Decline in demand in other African markets caused by store and border closures also contributed.
The company said it has also decided to cut back on capital expenditure – money that would have been spent on expanding stores and warehouses or upgrading existing one or on buying new equipment and assets. only critical projects will be carried through in the company’s current financial year, which ends in June. It is also negotiating with different stakeholders, including suppliers and landlords to reduce costs.
“We have engaged with our suppliers to reduce apparel product intake and to extend payment terms. We are also meeting with landlords to explore alternative arrangements to current lease commitments, through the relevant period,” said the company in a statement published on the Stock Exchange News Service on Monday morning.
The company said all its stores in New Zealand have been closed due to that country’s lockdown. The Australian government has not yet implemented a full-scale lockdown, but the group said its David Jones brand has decided to close few smaller stores, as well as Country Road stores because their smaller makes it difficult to implement social distancing protocols.
Country Road Group recorded a 32{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} decrease in sales this March compared to the same month last year, while David Jones sales fell by 19{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2}.