30 Big W Stores To Close Despite Ooshies Increasing Woolies' Profits
Woolworths will continue with plans to shut 30 of its Big W stores, despite growth at its supermarkets offsetting a soft result at the department store chain.
Big W suffered an $85 million full-year loss in earnings during the year, despite sales from continuing operations increased by 4.2 percent to $3.8 billion.
The department chain's result was, however, an improvement on a $110 million earnings loss one year ago.
"We were pleased with the material improvement in sales growth in Big W over the course of FY19, with customers noticing the improvements we have been making to price, range and in-store experience," said Woolworths Group Executive Director Brad Banducci.
Banducci reportedly said it would be proceeding with plans to close 30 stores -- as announced in April this year.
Banducci said he was not satisfied with the rate at which increased sales had translated into profits, the ABC reports, adding the closures would "accelerate the path to profitability".
It comes as Wesfarmers announced it will shut Target stores, after poor performance from the department chain offset an otherwise strong full-year result for the company.
Overall, Woolworths has raised full-year profit by 7.2 percent to $1.75 billion after a robust second-half performance by its Australian supermarkets offset the weak result for Big W and the liquor division.
The first eight weeks of the 2020 financial year (FY20) have been even better as Lion King Ooshies collectables helped drive 7.5 percent comparable sales growth across the company's 1,000-plus network of supermarkets.
Woolies has also lifted its fully franked final dividend by seven cents to 57 cents, for a full-year payout of $1.02.
Banducci said its supermarkets had recovered well from a first-half hit from the removal of single-use plastic bags, volatile weather and the success of rival Coles' Little Shop collectables.
Gross profit margins at the Australian food division softened slightly, which the company blamed on more stock being written off, wasted, stolen, cleared or marked down during the year.
"We remain focused on reducing stock loss in FY20 following a relatively poor performance in FY19," Banducci said.
Meat price inflation and the impact of fuel redemption costs being recorded in Australian Food also took a toll on margins.
Banducci said momentum was picking up across the retail group, after a challenging first half, though conditions remained tough.
"In the 2020 financial year, we expect the uncertain consumer environment and input cost pressures to remain, as well as an impact from new enterprise agreements," he said.