Woolworths cuts 400 more staff, seeks savings of $500 million plus

Woolworths will cut a further 400 non-customer facing roles as it seeks to maintain and improve its position as Australia’s leading retailer.

While Woolworths says its value position at its most competitive level since January 2014, its three year growth strategy outlined earlier this week, is based on a new ‘Lean Retail’ operating model which is expected to deliver more than $500 million of cost reduction across FY15-16.

Woolworths Lean Retail model will drive growth via seeking efficiency and investing in its customer offer – funded through a significant and ongoing focus on cost management within non customer facing operations.

In July 2014 Woolworths began a process of recognising cost savings in non customer-facing operations. Mr O’Brien said that Woolworths have reduced non-customer facing employee roles by around 400 full-time positions and found major areas of efficiency in our supply chain and back-office processes. Woolworths intends to further reduce non-customer facing roles by another 400 positions by the end of 2015 through process improvements.

According to Mr O’Brien, Woolworths is “on track to achieve cost savings of more than $500 million across FY15-16. This gives us great confidence that we will have greater than our original target to invest.

“Woolworths Food has already deployed $125 million into lowering prices. In addition, we have boosted in store service levels and stock availability. However, this is just the beginning and the majority of the investment program will be deployed in FY16.

“As part of ‘Lean Retail’, we will invest in a significant supermarket refurbishment program with 80+ stores per annum slated for improvement over the medium-term. We will also take further steps to widen our advantage as Australia’s leading multi-channel retailer.

“We will also invest in manufacturing capability to bring greater product ranges to our Food customers, particularly in the ‘Food for Now’ and ‘Food for Later’ convenience categories.

“By executing these plans, we will achieve strong and sustainable sales growth which will drive long-term returns for our shareholders.”

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