The man who “masterminded” the sale of Focus DIY to Cerberus for £1. On paper, it hardly looks like an achievement – until you realise Steve Johnson sold with it £174m of debt while negotiating a £40m payment to bondholders.
It’s a little bit like that at Woolworths, the company he is set to join next month, with lease and pension liabilities that need to be passed on as part of any deal. Everyone knows Woolies is in all kinds of trouble. So much so Johnson is being offered £9m to triple the share price to 20p in the next three years. Again, on paper, it hardly sounds like a big ask. The share price was 30p only a year ago. With his strong operational, marketing and indeed food experience, he should be able to improve the situation. Woolworths has been in trouble before, and Archie Norman sorted it out. Can Johnson do it again?
The obvious solution – to sell off 2 Entertain and the wholesale arm, which are at least making money – won’t work because the banks and pension holders will want to bag the cash, leaving the stores perilously exposed. But a sale of the retail arm is harder still.
Either Johnson needs to sort the retail business out; or leave it to another player to do so. Step forward Malcolm Walker. After the Iceland boss put in a speculative £50m bid last weekend, Woolies chairman Richard North initially rejected the offer. But by midweek, he was making come hither noises.
With Iceland on the crest of the discounting wave, some stores will inevitably be converted to that fascia. But following some success with the Worth It! range, it’s arguably Wilkinsons – with its discount general merchandise spec allied to a limited food offer – that looks the most likely route for conversions, assuming Walker gets it for the right price.