Woolworths has tapped Sally Macdonald, the woman who saved upmarket retailer Oroton Group from almost certain collapse, as chief executive of its struggling discount department store chain BIG W.

After weeks of rumours that Ms Macdonald was in line for the job – arguably one of the most challenging in general merchandise retailing – Woolworths confirmed the appointment on Friday, saying Ms Macdonald would commence her new role in January.

Ms Macdonald, 45, was once widely regarded as one of the best retail executives in Australia.

Sally Macdonald restored profit growth at Oroton and hopes to do the same at Woolworths' Big W. Rob Homer

As chief executive at Oroton between 2006 to 2013, she restored the up-market retailer's fortunes, taking the company from an underlying net loss of $9 million and an uncertain future to a net profit of almost $25 million in 2012.

During this time Oroton sold three underperforming businesses, including Marcs, launched an online retail store, and expanded into new product categories and markets such as Asia and the Middle East.