CBD
It was a masterclass in coming clean as Woolworths boss Grant O'Brien (pictured) finally confirmed the open secret in the market: the Masters hardware chain is costing a little more than Woolies anticipated. After stripping out earnings from its Danks hardware distribution unit, Masters losses this year would come in at $157 million. That's a lot of nails, screws and paint. O'Brien happened to be overseas for the bad news, but we're assured it was on business.
Number's up
Even so, Woolies' move into telcos was short-lived. The dial-in number handed out to dozens of fund managers and stockbroking analysts for the earnings update turned out to be a residential number in the suburbs of Sydney.
Just who happened to be on the other end wasn't picking up last night and the message bank was full. No doubt this was due to Australia's finest retail analysts leaving their level-headed responses at not being able to get onto the conference call.
Silver lining
While Masters' sales had come in substantially short of its targets, one of Woolies' hardware executives, Mark Burrows, managed to find a silver lining. For those who managed to get onto the conference call Burrows said the the Home Timber and Hardware brand - which is supplied by Woolies - has won the much-coveted Roy Morgan Hardware Store of the Year award.
Pulling the plug
It was a big day for Woolies as the retailer finally lost its inner nerd. It officially severed ties with its Dick Smith business after Nick Abboud's private equity play Anchorage Capital posted the remaining paperwork after last year's acquisition of the electronics chain. Within minutes of the deal going through, Woolworths finance director Tom Pockett was reportedly seen sifting wildly through his desk looking for one of those medium-voltage-capacitor-fuses thingies.
Options limited
Whoever prepares the ASX filings at Wilson HTM may not be too popular with senior management. Executives at the stockbroker will have to work that little bit harder to cash in on 2,600,000 share options after a paperwork glitch.
The stockbroker this week discovered the mistake in an Appendix 3B submitted in February, which wrongly said executives would be able to exercise the options at a share price of $0.31866. It should have said the "strike price" would be $0.26886, in line with the offer letters given to staff. Despite the error, Wilson said it would stick with the higher strike price.
On track
Aurizon's fat controller, Lance Hockridge, caught the XPT from his base in Brisbane for a powwow with analysts in Sydney. Apart from announcing another round of cost cutting, Hockridge was quick to offer "commiserations" to those nursing the Blues' narrow loss to Queensland. For investors, the blow of another home defeat was softened by the promise of at least another $230 million in savings.
Clash of titans
Spotted at ANZ Stadium for the State of Origin clash was Manly supporter Tony Abbott and chief cane toad Kevin Rudd. NSW boss Barry O'Farrell was getting privatisation tips from Lazard investment banker John Wylie.
Locked in
Still on sport, CBD may have put a few offside on Wednesday with an item on new Lion boss, Scottish-born Stuart Irvine, choosing a team. Rest assured, your fill-in CBD columnist is a fan of the round ball, too, and has already locked in this year's membership for the Western Sydney Wanderers.
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ejohnston@fairfaxmedia.com.au
Frequently Asked Questions about this Article…
Woolworths revealed Masters hardware will post a $157 million loss this year after stripping out earnings from its Danks distribution unit. For investors, that signals Masters is costing the company more than expected and is a material drag on Woolworths’ results that shareholders may want to monitor.
The dial-in number handed out for Woolworths’ earnings update turned out to be a residential Sydney number; many callers couldn’t get through and the voicemail was full. It’s a reminder that logistical mix-ups can disrupt investor communications and analyst access to company updates.
Yes. Woolworths executive Mark Burrows pointed out a silver lining: the Home Timber and Hardware brand supplied by Woolworths won the Roy Morgan Hardware Store of the Year award, which the company highlighted during the conference call.
Woolworths officially severed ties with the Dick Smith electronics business after Anchorage Capital, the private equity group led by Nick Abboud, posted the remaining paperwork to complete the acquisition following last year’s deal.
Wilson HTM’s Appendix 3B submitted in February misstated the strike price for executive share options. The filing showed $0.31866 but the correct strike price should have been $0.26886 to match staff offer letters. Despite the error, Wilson said it would stick with the higher ($0.31866) price, meaning affected executives may face a higher hurdle to exercise their options.
About 2,600,000 share options were affected by the Appendix 3B paperwork glitch, which created the discrepancy over the correct strike price.
Aurizon announced another round of cost cutting and promised at least $230 million in savings. Investors may note this because planned cost reductions and sizeable savings targets can affect future profitability and cash flow for the business.
Key items to watch are Woolworths’ Masters losses ($157 million) and any follow‑up on strategy or impairment, the Wilson HTM options strike‑price issue and its implications for management incentives, Aurizon’s delivery of the promised $230 million in savings, and outcomes from Woolworths’ divestment of Dick Smith. These developments relate to costs, corporate governance and shareholder value—important areas for investors to monitor.
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