An open letter to Grant O'Brien

Sam Ferraro

Global Founders Funds Management

Much hinges on Woolworths’ investor strategy day on Wednesday, in light of the stock’s poor performance in recent months. In an open letter penned to the Woolworths CEO, I show that a material deterioration in the company’s profitability prospects has coincided with the roll-out of Masters stores in 2011. With the expansion into home improvement, Woolworths has bucked the global trend towards corporate focus. Firms are increasingly demerging or selling off non-core units and deferring or abandoning growth options to cater to investors’ insatiable appetite for safe assets and income. I believe that investors will reward Woolworths if Mr O’Brien articulates a vision and future for the company that has a renewed focus on its core supermarkets business. I also suggest that the company’s structure of remuneration incentives represents best practice and discuss the importance of the company’s license to operate in light of the damning evidence of exploitation of migrant workers in Australia’s fresh food supply chain aired on the Four Corners program last night. (VIEW LINK)


Sam Ferraro
Senior Portfolio Manager
Global Founders Funds Management

Managing Director of Global Founders Funds Management, Sam has over 20 years experience in financial markets, with Merrill Lynch, JBWere and Goldman Sachs.

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