Target Struggles Now Big W Closes Another Store Despite CE Success
Yesterday it was Wesfarmers targeting the discount store market claiming that sales had slowed at Target now archrival Woolworths has moved to close another poor performing Big W store s COVID-19 impacts another victim.
This brings to 4 the number of Big W stores closed with Woolworths initially claiming that they planned to close 30 if more than 180 stores in the discount network.
Unlike Wesfarmers Woolworths believe that they can reengineer their Big W store network back to health after reporting a $21M profit in December after a record period of losses.
One of the biggest problems facing Big W is an 80 per cent drop in foot traffic in shopping centres however the Company is achieving record sales online according to Company sources.
Several major brands have said that they have been having a lot of success in the Big W consumer electronics and appliance category recently, among them are Laser Corporation, Logitech, Tempo with their Polaroid TV’s and headphones as well as the likes of Fitbit as customers buy up active wear and fitness trackers.
The biggest problem facing the consumer electronic category is a lack of stock with several suppliers telling ChannelNews that they won’t have new stock until June 2020 at the earliest.
In an email sent to CE and appliance suppliers Woolworths announced it was closing a loss-making Big W store at Calamvale in Brisbane.
Under the terms of the lease the Big W store must cease trading immediately, after giving notice to terminate, and will vacate the premises by May 12.
Big W ‘s general manager commercial, Teresa Rendo wrote “We do not anticipate that any future store closures would be subject to such tight time frames.
“Our immediate priority this week is our team members directly impacted, although we want to reassure you that our turnaround remains on track.”
Woolworths CEO Brad Banducci originally expected the chain to make a profit in the June half.
The AFR recently claimed that this now appears unlikely because of the impact of the COVID-19 crisis on discretionary spending such as clothing and accessories and the 80 per cent drop in foot traffic in shopping centres.
Bank of America Securities analyst David Errington expects Big W to lose $80 million in the June half as sales plunge by as much as 60 per cent in the June quarter, offsetting sales growth in the March quarter. Woolworths is due to release March-quarter sales on tomorrow, Thursday.
On Tuesday, Wesfarmers said it would fast-track a strategic review of Target after a sharp decline in sales in recent weeks.
Wesfarmers chief executive Rob Scott told The Australian Financial Review all options were on the table, including closing more of Target’s 285 stores, shrinking stores, converting more Target stores to Kmart, which has about 235 stores and growing its online business.
Analysts believe Target’s sales will fall about 30 per cent in the June quarter and the chain will post a loss this year.