Key Points
- Banducci was asked repeatedly during a hearing into supermarket prices to disclose Woolworths’ return on equity.
- The failure to disclose the answer led to the inquiry being forced to suspend its hearings.
- Woolworths made a $1.7 billion profit after tax in the most recent financial year.
Woolworths boss Brad Banducci has been threatened with a six-month prison sentence and a fine for failing to answer questions at a Senate inquiry over the supermarket’s profits.
Banducci was asked repeatedly during a hearing into supermarket prices to disclose Woolworths’ return on equity, a key measure of the company’s profitability.
Instead, the chief executive declined to answer the questions, focusing on the company’s return on investment.
“We measure return on investment, which we think is the right way of measuring profitability in a company,” he told the inquiry on Tuesday.
Inquiry chair and Greens senator Nick McKim warned Banducci a failure to answer the question directly may lead him to being held in contempt by the Senate.
Such a charge comes with a fine of up to $5000 and a possible prison sentence of six months.
The failure to disclose the answer led to the inquiry being forced to suspend its hearings.
The profit margins of major supermarkets has come under scrutiny at the inquiry, with Woolworths and Coles being accused of price gouging.
Woolworths made a $1.7 billion profit after tax in the most recent financial year.
‘Making off like bandits’
McKim accused Banducci of cherrypicking data surrounding the supermarket’s profits.
“The fact that (Woolworths’ return on equity) is 26 per cent in a year where you made $1.7 billion in profits shows that your company is making off like bandits and effectively has a licence to print money,” he said.
“You’ve used this market dominance to put the squeeze on your suppliers, including farmers, to force down wages, to compromise staff safety and to price gouge your customers.”
Senator Nick McKim accused Brad Banducci of cherrypicking data surrounding the supermarket’s profits. Source: Supplied / X
Earlier, Banducci denied Woolworths was price gouging.
“It’s very hard to say that we have price gouging,” he said.
“I would respectfully submit that this is an incredibly competitive market and that is good for consumers.”
Coles and Woolworths make up about two-thirds of Australia’s supermarket sector.
Banducci said inflation in the grocery sector had largely been the reason behind skyrocketing prices at the checkout.
“Grocery inflation is real and has been substantially driven by cost increases from our largest global consumer goods suppliers and the cyclical impacts in the domestic fresh food markets,” he said.
“While at Woolworths we’re now seeing falling rates of grocery inflation, nevertheless, we understand that many of our customers are under immense cost of living pressure.”
It is one of the last public appearances for Banducci, who announced his resignation from the top job in February following, where he struggled to answer questions about Woolworths’ market share.
Banducci will step down as chief executive at the end of August.
Coles chief executive Leah Weckert will make an appearance before the committee later on Tuesday.
The inquiry comes as a review into the voluntary food and grocery code of conduct, which governs the relationship between supermarkets and suppliers, recommended it be made mandatory, with significant financial penalties for breaches.
Tyler Mitchell