Woolworths has remained a near to naked underweight on our watchlist for some years. Despite its apparent quality, brand, scale, and returns, our portfolios have avoided its underperformance. Our concerns centered on uncertainty around how the company could defend its incumbency against a revitalized Coles and emerging Aldi. Last week Woolworths provided a market update under new CEO Brad Banducci. This included a further almost $1b significant charge, reflecting restructuring costs and asset write-downs. This covered impairments, store closures and provisions for onerous leases. These are mainly the result of failed attempts to expand margins and grow, with sales insufficient to generate adequate returns on investment. Weak sales performance was in turn caused by a weak customer proposition with stockouts, poor servicing, and an unclear value strategy. FY16 EBIT guidance was issued and was below consensus. There were some positives as well - read on to find out more.