BREAKING NEWS: Future For Target Looks Grim Wesfarmers Openly Discussing Problems
Wesfarmers has finally moved to openly discuss the future of Target after we exclusively revealed that the struggling business is close to being shut down or even sold.
Earlier today the big retail group who own Kmart, said that they are accelerating a strategic review of Target following a ‘significant decline’ in sales that will hit profitability this year.
Senior management at Wesfarmers have told ChannelNews that the future for Target looks “grim”.
The Company said that sales at Bunnings and Officeworks chains have boomed over the last four months but sales at Kmart and Target which are primarily based in closed down shopping centres have struggled.
For consumer electronics and appliance retailers the closure is only going to affect suppliers of house brand goods as the Company moved away mainstream brands.
In comparison archrival Big W has seen a surge in demand for goods during the COVID-19 lockdown especially consumer electronics and appliances.
In a trading update given to the ASX Wesfarmers Chief executive Rob Scott told investors that in-store sales momentum had moderated at Kmart in recent weeks and declined significantly in Target.
They said that both retailers were suffering.
“Given the high degree of fixed occupancy costs, a sustained decline in sales momentum will have a material impact on the profitability of Kmart and Target,” Wesfarmers said,
“In recent weeks, margins have also been impacted by higher levels of clearance activity and the increased cost of online fulfillment. While Kmart remains profitable, Target earnings have decreased significantly,” the company said.
Wesfarmers has accelerated plans to improve Target’s performance. These plans include a review of a range of actions to improve shareholder returns and assessment of strategic options for a commercially viable Target.
Wesfarmers have not denied that they plan to close down the Target operation.
Target has been a longstanding issue for Wesfarmers, with the struggling discount retailer dragging on the company’s otherwise solid earnings and faring far worse than cult-favourite Kmart.
Wesfarmers has embarked on a mission to bring Target’s product offerings into the mid-market, though some analysts believe it may then compete too closely with the likes of Myer.