Given the current retail environment it may not come as a surprise, but today’s announcement of Big W store closures is nevertheless a shock that is sure to have a ripple effect.
CEO of Woolworths Group, Brad Banducci, has today announced store closures of approximately 16 percent of the company’s Big W network.
The stores will close over the next three years, and two distribution centres in South Australia and Queensland will also be shut when their leases end in 2021 and 2023 respectively. The announcement comes after a six-week review and was foreshadowed at the company’s 2019 half-year results.
“[W]hile the recovery in trading for BIG W is encouraging and there remains further opportunity for improvement, the speed of conversion to earnings improvement is taking longer than planned,” Banducci said of the closures.
“This decision will lead to a more robust and sustainable store and DC network that better reflects the rapidly changing retail environment,” he explained.
The aim is to accelerate a turnaround plan through a more profitable store network, simplifying processes, improving stock flow and lowering inventory.
Banducci has said that team members affected by the closures will be offered alternative employment options within the Woolworths Group where possible.
Woolworths also confirmed a $1.7 billion share buyback following the sale of its fuel operation to EG Group and said that its results would include $270 million in lease and exit costs for closing the Big W stores and DCs. After reporting a loss of $110 million in 2018, Big W is forecast to lose $80 million to $100 million this year.
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