Source: The Australian

Story By: Blair Speedy

NEWLY installed Woolworths chief Grant O'Brien is determined to maintain his company's position as Australia's most successful retailer, taking the fight to resurgent rival Coles on multiple fronts.

In his first interview since taking over as chief executive on October 1, Mr O'Brien said an improved performance by Coles need not imply a downturn at Woolworths.

"All I see is opportunity and upside," he said. "Woolworths has been a successful business and history shows that it's much harder to get significant incremental growth from a successful business, it's much easier to get it from a turnaround."

Coles yesterday reported comparable store sales growth of 5.2 per cent for the first quarter of the financial year, its fifth straight quarter above 5 per cent -- a pace Woolworths hasn't touched for two years.

However, Woolworths remains a much larger and more profitable business, with its $36.3 billion Australian food and liquor division generating an EBIT margin of 6.6 per cent, a substantial lead over the 4.2 per cent EBIT margin Coles draws from its $25.2bn supermarket division.

Nonetheless, Mr O'Brien concedes Woolies underestimated the threat posed by Coles after its 2008 recruitment of Scotsman Ian McLeod, who played a major role in the turnaround of British chain Asda in the late 1990s.

"Over the last decade, through the series of management changes they had with John Fletcher and Steven Cain or Dennis Eck, from time to time they looked like the new blood was going to change everything, but each time they faded away," he said.

But Mr O'Brien said the era of growth at Woolies, which will report first-quarter sales numbers next week, was far from over despite the company forecasting profit growth of just 2 to 6 per cent this financial year, down from 23.5 per cent in 2007-08.

While supermarkets will continue to be the company's largest and most important business, Woolies is expanding aggressively into new territory with its Masters chain of home improvement stores while seeking acquisitions both at home and offshore.

To read the full story, follow this link: www.theaustralian.com.au/business/profit-loss/growth-era-not-over-says-new-woolies-boss/story-fn91vch7-1226172264738