Has Officeworks Got The For Sale Sign Back Up?
Officeworks one of the crown jewels in Wesfarmer retail portfolio could be up for sale again, the big question is who would buy it.
Harvey Norman has already had a crack at taking on Officeworks and failed while JB Hi Fi is looking to expand their commercial operations.
During the past few months Officeworks performed strongly, posting a huge 20.4 per cent increase in revenue to $2.8 billion with several brands including Acer, HP, Epson and Lenovo reporting record sales at the big stationary retailer.
Two brands told ChannelNews that Officeworks were delivering “better” sell through of products than JB Hi Fi and that their terms during COVID-19 were better than their competitors with the Wesfarmers owned business offering incentives to brands to get access to stock.
Officeworks earnings rose 13.8 per cent to $197m this year.
At this stage Wesfarmers appear to be “undecided” as to whether to stick the for sale sign up at Officeworks. 18 months ago, the Perth based Company held discussions with several interested parties regarding the sale of Officeworks and potentially Bunnings.
Currently management are conducting a review according to the Australian, as to how to transform Wesfarmers’ retail operations to fulfil its ambitions of creating an online marketplace to compete with Amazon, which is why Wesfarmers purchased online outlet centre Catch Group.
Wesfarmers progressed some way down the track with an initial public offering of Officeworks in 2017, with its value then tipped to be more than $1bn.
But the deal was pulled in the late stages of the listing plans.
The problem at the time was that Amazon was launching in the local market as a provider of products that extended far beyond what had been predominantly books, CDs and DVDs, and the concern was that the retail giant would eat into Officeworks’ market share and potentially bring the business to its knees. That never eventuated and in fact, largely due to the COVID-19 pandemic, where the country has had to work from home, Officeworks is booming.
Wesfarmer management in the past have been very clear about their investment plans for Officeworks hiring top executives to focus on the business, including former Coles executive Sarah Hunter, who is head of productivity, and head of strategy development Ryan Rojo.
Some insiders claim that some Wesfarmers directors are of the opinion that the group is too exposed to the retail sector, which has faced digital disruption from online giants and global brands.
The Australian said that years ago, it had the opportunity to sell Target and Kmart to private equity firms but it rebuffed the offers only to find that buyout funds are no longer interested and the operations are struggling to grow profits. Earnings at Kmart and Target fell 23.5 per cent to $410m for the 2020 financial year.