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Oz CE Channel To Benefit As Big W Turnaround Becomes “Work In Progress”

The departure of former Big W CEO Sally McDonald had local consumer electronics vendors facing an uncertain future with the mainstream retailer.

During her tenure, McDonald, understood to have brought staff with her from fashion retailer Oroton, pushed to expand the retailer’s consumer electronics section at the expense of its fashion one.

Given Woolworths CEO Brad Banducci comments that “we are currently reviewing the BIG W strategic plan and this will be completed in the next few months,” it’s a possibility that Big W’s next CEO could reverse course given its impact on Woolworth’s overall balance sheet.

Big W contributed to an overall 16.7% decline in net profit for Woolworths’ continuing operations to $785.7 million.

Pre-tax profit for the chain, which chairman Gordon Cairns called “significantly challenged” last year, dropped 88.9% to $8.1 million, alongside a 6.3% fall in comparable sales.

However, while McDonald’s departure in November of 2017 took many by surprise, it looks like parent-company Woolworths will be staying the course and could be poised for a comeback in the future.

ChannelNews understands that the retailer will be continuing to invest in stock from consumer electronics categories, ramping up on its offerings within the category.

“Despite the negative sales performance, promotional initiatives helped to drive a solid sales improvement in the back half of December. We achieved solid sell-through of seasonal product with lower inventory levels at the end of the half than the prior year,” the company indicated in a press release.

“Toys and Entertainment continued to perform relatively better while Fashion, Consumables and Home and Beauty were below expectations. In-house designed product remains at a very early stage and did not impact the performance in the half,” they go on to say.

The highlighting of the entertainment category performing well isn’t particularly surprising. That section of the retailer has a history of performing well.

In 2011, Big W reportedly rose to become the #1 seller of Apple iPads after slashing prices on the popular tablet.

Companies such as a Powermove, who supply Philips headphones, and Tempo, who supply thousands of Polaroid UHD TVs often on consignment, had previously seen sales double under McDonald.

Last year, one supplier indicated “past management and there has been a few were reluctant to invest in CE; McDonald did and we reaped the benefit. Past management have also been more interested in clothing and homeware despite their past sales success with CE related products.”

While Woolworth’s execs didn’t shy away from calling Big W a “work in progress”, evidence suggests that the retailer that comes out of this will be one poised to regain its profitability.

What’s more, with rumors that Wesfarmers may look to shutter Big W’s long-time rival Target, a solid investment into the consumer electronics retail space might come at the perfect time.

In its most recent earnings report, Target continued to fade from Wesfarmers’ balance sheet, with earnings from the faded apparel retailer slipping 78.4% to $16 million.

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