Senate Inquiry Threatens to Jail Woolworths CEO Over Refusal to Disclose Financial Metrics

A heated Senate inquiry into supermarket pricing and profitability took a tense turn as Woolworths CEO Brad Banducci faced threats of potential jail time for refusing to disclose the company’s return on equity (ROE) figure. The inquiry, chaired by Greens senator Nick McKim, pressed Banducci on the financial metric essential for gauging profitability, but Banducci repeatedly sidestepped the question, citing a different metric he favored.

McKim accused Banducci of engaging in spin and attempting to dodge the scrutiny of the committee by not addressing the ROE, which he believed painted a picture of excessive profits at the expense of farmers, workers, and Australian consumers. Banducci’s reluctance to provide the ROE led to a contentious exchange with McKim, who warned him of potential contempt charges, including up to six months of imprisonment.

Banducci defended Woolworths’ stance, emphasizing their focus on return on investment rather than ROE, asserting that customer value and affordability were key considerations. He argued that Woolworths would not retain customers if they engaged in price gouging, highlighting the competitive nature of the retail sector.

McKim pushed back, contending that Banducci’s refusal to disclose the ROE indicated a reluctance to confront the true extent of the company’s profitability, which he suggested was disproportionately high compared to industry benchmarks. The inquiry aimed to investigate the pricing strategies of major supermarket chains, with Woolworths and Coles dominating the Australian market.

While Coles CEO Leah Weckert disclosed the company’s ROE figure promptly during the hearing, she faced scrutiny over transparency in disclosing product profit margins and sales data. Weckert acknowledged the need for improved supplier relations, acknowledging concerns about market power abuse in negotiations with suppliers.

The inquiry has also drawn attention to the impact of rising grocery prices on Australian households, with concerns raised about decreased food consumption amid escalating costs. Suppliers in the fresh produce and dairy sectors have highlighted challenges in dealing with the major supermarket chains, citing pressure from unsustainable pricing demands.

The Senate inquiry continues to delve into the practices of Woolworths and Coles, aiming to address issues of market dominance, pricing fairness, and supplier relationships in the Australian retail landscape.