Official Wesfarmers To Close Target Stores
In order to further accelerate the strong growth that Kmart has witnessed since the onset of COVID-19, Wesfarmers has outlined a plan to transform Target stores to Kmart stores, as well as channel more investment from Target to Kmart.
In addition to bolstering Kmart, this restructuring aims to address what Wesfarmers calls “the unsustainable financial performance of Target”.
As such, Wesfarmers plans to convert 10 to 40 large format Target stores to Kmart stores, and convert approximately 52 Target Country stores to small format Kmart stores.
Wesfarmers will also close between 10 and 25 large format Target stores, as well as the remaining 50 Target Country stores that are not suitable for a Kmart transformation.
“Leveraging the strengths of the Kmart Group, we have made a significant effort to avoid store closures, retain our valued team members, keep serving our customers and supporting our suppliers,” Kmart Group Managing Director Ian Bailey said.
“Unfortunately, the disruptive and competitive nature of the retail sector requires us to make some difficult decisions to ensure we have a viable Target business into the future, while continuing the strong growth of Kmart and Catch,” Bailey said.
These changes will result in a significant reduction in the size of the Target store support office. However, Wesfarmers has said that team members at Target stores will receive an offer of employment from Kmart.
These conversions will rely on negotiations with landlords. Wesfarmers has said these are ongoing.
In its update posted on the ASX this morning, Wesfarmers also reaffirmed that they will be expanding the online operations of their successful retailers, which include Catch and Kmart.
“The reduction in the Target store network will be complemented by increased investment in our digital capabilities, following the continued strong growth in online sales across the Kmart Group and the pleasing progress in Catch since its acquisition in August 2019,” Wesfarmers Managing Director Rob Scott said.
“The expansion of our digital offer will provide customers with access to the Kmart and Target products they love, together with over two million products from the Catch marketplace, via home delivery or click and collect,” Scott said.