Australian department store Big W is due to shut a large number of stores and operations facilities following a steady decline in profits.
The group will be closing 30 stores and two distribution centres over the next three years, resulting in approximately 16 percent of the company’s outlets being shuttered.
Woolworths is the parent company of Big W, and their CEO Brad Banducci released a statement explaining their decision to close so many 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.”
While Big W reported a six percent rise in sales in the third quarter, but this growth was not enough to make up for the brands continued loss in profitability. Big W is expected to report a loss of approximately $90 million AUSD before tax, which despite being lower than the $110 million loss in fiscal 2018 is still not enough to bring the company back into the green.
“While 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,” expressed Banducci.
Woolworths will take a loss of $270 million in lease and exit costs and $100 million in non-cash asset impairments following Big W’s closures.