Big W is in trouble, so is their parent Company Woolworths, and this does not bode well for the future of the discount retailer, who is also getting beat up by arch rival Kmart the Wesfarmers owned business whose house brand Anko is driving sales in both their stores and overseas retailers, also impacting the business is online trading sites such as Temu who are selling similar products cheaper than Big W.
The big question now is whether the national retailer is about to be sold.
The Woolworths owned Company has been up for sale in the past, with various groups including Premier Investments running a ruler over the books only to dismiss the notion of buying the struggling retailer.
The Woolworths board has tried several ways to try and fix their problem with the appointment of new senior management and a reshaping of categories and assortments.
A major issue for suppliers is their consignment model with several walking away from selling goods via Big W, because of slow sales, returns and security issues with distributors not prepared to carry the stock risk associated when trading with Big W.
Big W’s sales fell in the last half of 2024 with discounting taking its toll as profits fell 45.9%.
BIG W total sales also declined by 0.4% to $2,584 million with EBITDA falling over 35%.
Earnings are collapsing and one of their key issues in the last quarter which is normally the biggest one of the years.
The problem for Woolworths management is that they are fighting to fix problems at Woolworths and across their food business and Big W is a distraction.
Earnings are collapsing due in part to higher costs and the fact that buyers are failing to pick growth categories and products that resonate with consumers who due to inflation pressures, have become selective in what they and at what price.
Kmart has momentum due in part to their Anko range and the selection of merchandise that is selling through faster with more profit per item than at Big W.
Woolworths recently appointed CEO Amanda Bardwell told the Australian that Big W will be part of a portfolio review going forward.
The big question is whether there is space for a Big W, Target and Kmart who are today having to compete with the likes of Temu and overseas trading sites that are selling similar products to Big W at significantly cheaper prices even when shipped direct from warehouses in Asia.
The Australian claimed that Big W has undergone a number of reviews and resets over the past two decades, and there’s no certainty that another will make a difference. Bardwell has put new management into Big W.
Bardwell admits that the focus for Woollies should be on the core business of selling food, she says.
As for Woolworths, management appears to be more focused on their trading problems at Woolworths stores than Big W with Shoppers’ perceptions of value at Woolworths falling in the six months to January 5, the company admitted yesterday.
The business is also hosing down problems after Australian Competition and Consumer Commission alleged that both Coles and Woolworth were offering fake discounts of hundreds of every day grocery items.
Bardwell announced yesterday that first-half earnings before interest and tax of $1.39 billion, short of its forecast of between $1.48 billion and $1.53 billion.
Interim net profit fell 20.6 per cent to $739 million, also dragged lower by the earnings slump at its discount department store chain Big W.
