Woolworths CEO Threatened with Prison Over Refusal to Disclose Financial Data at Senate Inquiry

Woolworths CEO faces legal threat for refusing to disclose financial data during Senate inquiry on supermarket prices and profitability. Coles CEO provides detailed metrics, highlighting industry transparency concerns.

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Woolworths CEO Threatened with Prison Over Refusal to Disclose Financial Data at Senate Inquiry

Woolworths CEO Threatened with Prison Over Refusal to Disclose Financial Data at Senate Inquiry

Woolworths CEO Brad Banducci faced the threat of a six-month prison sentence or a $5,000 fine for refusing to disclose the company's return on equity during a Senate inquiry on supermarket prices in April 2024. The inquiry, chaired by Greens senator Nick McKim, is examining the high prices charged by supermarkets and the profitability of major chains like Woolworths and Coles.

Banducci argued that Woolworths focuses on return on investment and total shareholder return measures instead of return on equity. When pressed by Senator McKim to provide the requested financial information, Banducci stated, "It's not a metric that drives the industry." McKim warned Banducci that failing to answer the question directly could lead to him being held in contempt of the Senate.

While Banducci ultimately avoided being held in contempt, he was unable to provide the full return on equity figure sought by the inquiry. In contrast, Coles CEO Leah Weckert provided detailed financial metrics during her testimony, including a 31% return on equity, 15% return on capital, and 11% return on invested capital. Weckert also acknowledged that Coles had let down suppliers and could do a better job on its pricing and discounts.

The inquiry is investigating whether recent price increases and higher profits at the supermarket chains are largely due to external factors like supply chain disruptions and increased costs, or if they are a result of profiteering. Some argue that return on equity may not be the best metric to judge the supermarket industry, as it does not account for factors like the equity and asset base built over time.

Why this matters: The Senate inquiry highlights the ongoing scrutiny and pressure faced by Australia's major supermarket chains over their pricing practices and profitability. The refusal of Woolworths' CEO to provide key financial data raises questions about transparency and accountability in the industry.

The inquiry is set to continue, with further hearings planned in the coming weeks. As the investigation progresses, it remains to be seen what additional information will come to light regarding the pricing strategies and financial performance of Australia's supermarket giants. The outcome of the inquiry could have significant implications for both the supermarket industry and Australian consumers.

Key Takeaways

  • Woolworths CEO faced jail threat for refusing to disclose return on equity.
  • Coles CEO provided detailed financial metrics, including 31% return on equity.
  • Senate inquiry examining high supermarket prices and profitability of major chains.
  • Woolworths' refusal to provide data raises questions about industry transparency.
  • Inquiry outcome could have significant implications for supermarkets and consumers.