Wesfarmers Tipped To Lament $3.6B Target Hole
Wesfarmers-owned department store, Target Australia, is tipped to have accrued total write-downs, impairments and goodwill relocation of $3.65 billion since 2012 according to analyst estimates.
Reported by the AFR, the figure follows JPMorgan analyst forecasts, and is higher than the $3.5 billion in value for its proportional allocations of retail brands at the time of Wesfarmers’ purchase (around $3.5 billion).
It comes after Wesfarmers purchased Coles Group (inc Kmart and Target) for $19.3 billion in 2007.
Kmart has continued to be a notable performer for Wesfarmers. Target Australia’s network of 285 is set to halve over the next 18 months following a strategic review. Stores will either close or be converted to Kmart outlets.
Rival Woolworths-owned discount department store, Big W, is also furthering a strategic turnaround pre-COVID19.
Local department stores have continued to brace tough conditions, with South-African owned David Jones inferring a ‘retail recession’ even before the coronavirus pandemic.
Market watchers attribute the rise of online shopping for cannibalising department store sales, however, Myer has seen a significant uptick in online orders amid COVID19.
The news comes as many local retailers accelerate their digital transformation journey, with Wesfarmers purchasing et-tailer Catch Group for over $200 million in 2019.
Commentators claim the decline of Target Australia was largely due in part to a confusing product mix, with Kmart nailing the value category.