Report says up to 60 Big W stores could close
Up to 60 Big W stores may be forced to close according to a recent Macquarie Wealth Management report, first reported in the Australian.
Woolworths Group, which owns the discount retailer, undertook a review into the Big W store and distribution network, which found that up to a third of its 183 Big W stores may need to close if the retailer continues to underperform.
The Macquarie report said that ‘partial closure of the most unprofitable and shorter lease stores is more likely’.
‘Given significant closure costs for the portfolio, a more likely scenario is Woolworths to close up to one-third of its stores (60 stores), in our view. This cost could be around $759 million … In a challenging retail environment, we see a reduction in store count as the most likely outcome from the review. Given the format of Big W stores, we believe it would be difficult to reduce space as Myer is doing and that outright store closure is more likely,’ said the report.
The report also noted that around half of Big W’s stores are located in regional areas, adding, ‘It is unlikely these locations will enable Big W to regain the momentum required for profitability.’
Big W posted a loss of $110 million last financial year and $8 million in the first half of 2018-19, however the retailer also generated sales growth of 0.9% in the 2017-18 financial year, something the business had not been able to do in almost 10 years.
Big W category manager for books and magazines Meredith Drake said: ‘At this point, the review of the network is ongoing and no decisions have been made … the business will come back to the market in April once the review has been completed.’
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