The sense of crisis swirling around iconic Australian supermarket chain Woolworths Ltd (WOW.AX) erupted into the open on Wednesday as the retailer slashed its profit forecast and said its chief executive would step down.

The country’s biggest supermarket operator also said 1,200 jobs would go as it headed for its first annual profit drop in at least 19 years amid tough competition and falling market share.

Investors welcomed the surprise departure of under-pressure Chief Executive Grant O’Brien, who said he would retire after less than four years in the job. Woolworths shares jumped almost 3 percent, outperforming the broader market.

“The recent performance has been disappointing and below expectations. I believe it is in the best interests of the company for new leadership to see (growth) plans to fruition,” O’Brien said in a statement.

Woolworths said it had launched a global search to replace O’Brien, who would remain in the role until a successor was appointed.

O’Brien faced intense scrutiny after the Australian supermarket giant ceded market share to arch-rival Coles, owned by Wesfarmers Ltd (WES.AX), and cut-price newcomers like Germany’s Aldi [ALDIEI.UL], leading to its first quarterly sales decline in more than 20 years in the third quarter.

The 91-year-old company said it now expected its full-year net profit to fall 12 percent after spending A$270 million on one-off costs associated with a restructuring announced last month.

Without one-offs, it said full-year profit would come in flat, compared to its previous guidance of 1.8 percent growth.

The costs included A$40 million-A$50 million in redundancies.

“I think regardless of who is at the helm there is ongoing headwinds in the sector,” said Romano Sala Tenna, a fund manager at Perth-based Katana Capital.

“The reason the market is finding a positive lead is because there are hopes the new CEO would review the whole vision and look at ways to change the strategy. That’s probably why there’s a positive reaction today.”

Woolworths shares have fallen 12.5 percent this year to Tuesday’s close, while Wesfarmers’ have barely changed. The benchmark S&P/ASX 200 is up 2.3 percent this year.

($1 = 1.2900 Australian dollars)

(Additional reporting by Byron Kaye Editing by Stephen Coates)

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