Big W to shut 30 stores across the country

Big W to shut 30 stores across the country

Big W to shut 30 stores across the country

Woolworths has confirmed it's closing thirty Big W stores over the next three years, amid persistent rumours the embattled department store is scoping for a buyer.

In a statement released by Woolworths Group, who own Big W, it was revealed the distribution centre in Monarto in South Australia was also due to close in 2021.

In its report last month, Macquarie noted that half of Big W's stores are located in challenging centres, many of which are regional, and that these locations are unlikely to give the brand the sales it needs to return to profitability.

The store closures will make up around 16 per cent of Big W's network.

The store closures depended on the terms of the lease agreements Woolworths has with landlords - with the duration of leases being 10 years on average.

Big W said it cannot name the affected stores due to ongoing talks with landlords, with all stores to trade as normal until more information is released. The company said all stores and DCs will continue to trade as usual. The remainder will comprise of $100 million (US$71 million) in non-cash asset impairments, which Woolworths blames on a more conservative level of margin recovery expected from BIG W due to a growing number of customers preferring to buy online instead of in brick and mortar stores.

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Woolworths expects its department store business to record a loss before interest and tax for FY19 of $80 to $100 million, slightly below the $110 million loss felt in FY18.

As a positive for investors, Woolworths has also announced it completed the $1.7 billion sale of its petrol group to EG Group, enabling the retailer to commence a $1.7 billion off-market share buyback.

Woolworths asserts it will seek to provide affected team members alternate roles within the group where possible.

"It will accelerate our turnaround plan through a more profitable store network, simplifying current business processes, improving stock flow and lowering inventory", he said.

At 12:34pm (AEDT) Woolworths shares had jumped 2.2 per cent to $31.06.

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