Masters Failure Stings As Woolworths Posts $1.23 B Loss
Woolworths has posted a net loss of $1.23 billion for the 2016 full year, stung by a writedown related to its failed Masters venture.
Woolworths, which yesterday revealed that Masters will close doors by the end of the year, took a $2.63 billion hit in writedowns, with its net loss for the year comparing with last year’s net profit of $2.15 billion.
Net profit after tax from continuing operations, excluding significant items, was $1.56 billion, down 39.2 per cent.
Revenue for the year of $60.65 billion was down 0.8 per cent.
Woolworths’ Big W business posted sales of $3.82 billion, down 2.8 per cent, and a $14.9 million EBIT loss, compared to EBIT of $111.7 million in the previous year.
Among a number of initiatives in line for Big W, Woolworths stated that it plans to declutter stores for easier navigation, along with overhauling store stock and workflow process to improve productivity.
Woolworths CEO Brad Banducci described it as “a year of unprecedented change for Woolworths”.
“The decisions we have taken and investments we have made have had a material impact on our FY16 results, but have been necessary to begin the rebuilding of Woolworths,” Banducci commented.
“We are seeing early signs of progress as we work to restore our competiveness and improve our culture in Australian food. We have also addressed significant issues facing the group with the decision to exit home improvement and decisive action taken on Big W to reposition the business.”
Woolworths yesterday revealed that trading at all Masters stores will cease by December 11, advising that it has agreed to three separate contracts facilitating its exit from home improvement for estimated gross proceeds of $1.5 billion.
Mitre 10 Australia owner Metcash will acquire Home Timber & Hardware Group for a cash consideration of $165 million.
Masters inventory will be sold down in the coming months, with a proposal also having been made for the purchase of Masters properties.