VC Funds Circle Big W As CE Suppliers Suffer, After SAP System Upgrade Goes’Pear Shaped’
Already several venture capital funds including International funds KKR & Co and TPG Capital, have had discussions with Woolworths management who are also facing the real possibility of having to sell their Masters hardware chain due to heavy losses.
Big W, which competes with Wesfarmers’s Kmart and Target outlets, operates 184 stores and accounted for 6.8 per cent of Woolworths’s sales in the year through June. The discount chain’s operating income for the year fell 25 per cent to $114.2 million.
Representatives for Woolworths, KKR and TPG declined to comment.
The Big W chain which has suffered from poor management and declining sales in key categories is estimated to be worth around $1.5 billion.
Fairfax Media reported that discussions may not begin in earnest until a replacement for chief executive Grant O’Brien comes on board, and there’s no certainty that Woolworths will be willing to part with the business, insiders said.
Woolworths, which also owns Australia’s largest supermarket chain, in June cut its full-year profit forecast and said O’Brien would retire after less than four years at the helm. The Sydney-based company named Gordon Cairns as its new chairman August 28 as it unveiled its first drop in sales from its food and liquor stores since 2005.
KKR in 2006 led a group of buyout firms that offered $US18 billion for Coles Group.
A major supplier to Big W told ChannelNews that their sales for the year were down “due to a balls up at Big W due to a SAP upgrade of a supply chain system going pear shaped”.