The new chief executive of Woolworths plans to close the company’s final-salary pension scheme, cut jobs and sell stores after the ailing high street retailer reported a record £100 million half-year loss yesterday.

Steve Johnson, who took over a fortnight ago, said that there needed to be a radical reduction in costs if the 99-year-old business were to survive.

In a frank assessment of the failings of his predecessor, Trevor Bish-Jones, he added that although Woolworths still had a place on the high street, it was making too many basic mistakes.

Mr Johnson said that poor availability meant that about 1,200 of Woolworths’s 40,000 products were out of stock at any time. Moreover, although the group stocked 54 types of pencil case and more extension leads than a DIY store, it did not stock other essentials, such as tights.

He is also ending the brief foray into home shopping through its Big Red Book catalogue — a key part of Mr Bish-Jones’s recovery strategy — to save money and will invest in lowering prices across the store.

The scale of his task was revealed when results showed that Woolworths fell £99.7 million into the red in the six months to August 2, against losses of £63.8 million a year ago. Like-for-like sales in the group’s 819 high street stores declined 3.2 per cent and net debt spiralled to £294.5 million. The interim dividend was scrapped.

Mr Johnson said: “I was prepared for a big challenge and nothing I’ve seen over the past two weeks has disabused me of that notion. I don’t expect a turnaround to happen quickly or easily, but I do think there are things that we can do in the near term which will start to move us in the right direction.”

He conceded that job cuts were inevitable. More than 120 larger Woolworths stores could be sold, closed or downsized as Mr Johnson looks to centre the turnaround on more profitable smaller and medium-sized sites. Shares in the group closed down by almost 1 per cent at 6p.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive