The perennial problem for Woolworths is that, like WH Smith, if it didn’t exist you would not invent it. Despite the best efforts of Trevor Bish-Jones, the chief executive, this will never go away.
Given the continued sales and profits fall and nerves about the success of an ambitious internet strategy, it should come as no surprise if shareholders such as Baugur are getting edgy.
Brokers at Seymour Pierce reckon that Baugur, a 10 per cent stakeholder and permanently associated with retailing takeover, “might turn nastier” if expected improvements don’t come through in the second half.
While premature, talk of a potential break-up of the group has merit. If shoppers are still not spending in its 800 stores, then why presume they will flock to spend online? Selling unwanted stores to supermarkets would generate cash and help make the group considerably slimmer.
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Separating the music and entertainment division that publishes DVDs and CDs might create further value.
WH Smith has dealt with its inherent redundancy by splitting its news and magazine distribution arm from its high street retail outlets, with signs of early success. Perhaps Woolworths should consider this.