Woolworths has announced it will close 30 of its Big W discount department stores, in part because customers are moving to online purchasing.
The company today issued a market update [PDF] in which it said “approximately 30” stores and two distribution centres (DCs) won’t have their leases renewed. The update said that Woolworths has forecast “a more conservative level of margin recovery expected from BIG W, taking account of both current trading and the outlook for the broader sector, including the continued customer shift to online.”
Big W is a significant player in the consumer electronics market, with smartphones and smart home kits among a range that’s rather more extensive than that on offer at rivals Kmart and Target.
Clearly those products aren’t alone in failing to attract customers, who have plenty of other retail options to buy a phone or accessories.
The company will take a $270 million hit “mainly related to lease and other store exit costs” as a result of the move, but will emerge operating over 150 stores .
“This decision will lead to a more robust and sustainable store and DC network that better reflects the rapidly changing retail environment. It will accelerate our turnaround plan through a more profitable store network, simplifying current business processes, improving stock flow and lowering inventory,” said group CEO Brad Banducci.
In a letter to shareholders [PDF] Banducci added that “All businesses are now focused on delivering an exceptional Christmas experience and we have strong plans in place to deliver the best possible in-store and online experience for our customers.”