[ad_1]
* Woolworths will close 30 Big W stores
* The Discount Dept division has posted losses since 2016
* A repurchased retail detail of $ 1.7 billion, shares reached their highest level in 8 months (writes, adds comments from CEO and badyst)
By Tom Westbrook
SYDNEY, April 1 (Reuters) – The Woolworths Group will close about one-sixth of its deficit-making department stores over the next three years, the biggest grocer in Australia said on Monday, although it does not exclude the sale of the division, which has long been under -performante.
Big W stores, selling everything from clothes and camping gear to kitchen appliances and televisions, have been weighing on Woolworths' profitability ever since their profits in 2014 turned into growing losses. three years.
The division has been in rollover mode since, without gaining much traction. The announced release of 30 stores at a cost of 270 million Australian dollars (192 million US dollars) illustrates both the errors of progression and the strength of the market, said investors.
Prioritizing the range to reach the margins, rather than investing in lower prices, has resulted in a slow decline in customer base, said Jason Teh, chief investment officer of Vertium Asset Management, which previously held the shares of Woolworths but sold them in February.
"It means that at some point you'll have to press the big reset button," Teh said. "The company does not make any profit, it removes some of that drag," he said, referring to store closures.
Woolworths operates 1,008 supermarkets and 183 Big W stores in Australia. It also has 181 supermarkets in New Zealand.
The company also announced the details of a previously announced $ 1.7 billion share buyback by releasing proceeds from the sale of its gas station network in November.
This allowed Woolworth shares to reach an eight-month high, while the overall market grew 0.6%.
LITTLE W
Big W's contraction – with the closure of two distribution centers and stores – comes as Australian retailers are under tremendous pressure. The largest real estate recession of a whole generation led to a corresponding decline in consumer spending.
According to research firm IBISWorld, the profits of Miart and Target, which belong to Wesfarmers Ltd and have a market share of nearly 50%, fell by nearly 50% in the first half, against 20% for Big W .
"The entire industry is relatively difficult right now," said Brad Banducci, general manager of Woolworths, during a conference call.
The division lost A $ 110 million in FY 2018, less than the A $ 150.5 million lost a year ago.
Woolworths expects the loss to tighten further this year, but has also signaled a non-cash depreciation of A $ 100 million due to the gloomy outlook.
Banducci said the company was "open to alternatives" with respect to the Big W property, but that its primary goal was to accelerate its late turnaround, adding that sales of its third fiscal quarter had increased.
"Our customers are starting to vote with their feet," he said. "Now translating sales and transaction growth into profits is in line with the current target." (1 USD = 1.4075 Australian dollar) (Report from Tom Westbrook in Sydney, additional report from Aditya Soni to Bengaluru edited by Stephen Coates and Muralikumar Anantharaman).
Source link
