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What Toll Will Masters Exit Take On Woolworths’ FY Results?

Woolworths’ full-year results are due for release on Thursday, with a point of interest being the impact of its exit from the Masters Home Improvement business.

Fairfax Media has reported that Credit Suisse analysts state that total impairments could reach $2.7 billion, with a restructuring charge of $960 million and the exit from Masters being treated as a “discontinued operation”, which could leave Woolthworths with a statutory loss of around $1 billion.

In an update on its operating model review released towards the end of last month, Woolworths had provided a rundown of its group review restructuring costs.

Woolworths had advised that the review had lead to restructuring costs of $959 million ($571 million non-cash), or $766 million after tax, to be recognised in its financial year 2016 results.

“This will be a three-to-five year journey and we are determined to drive sustainable improvements in sales per square metre and return on funds employed to deliver value for shareholders,” Woolworths chief executive officer Brad Banducci stated at the time.

Woolworths advised at the time that it expected financial year 2016 EBIT from continuing operations before significant items of $2.55 billion to $2.57 billion.

Meanwhile, Fairfax has reported that Woolworths has again made changes to its customer loyalty program, getting rid of Woolworths dollars for Woolworths points and reintroducing Qantas Frequent Flyer points, with the new scheme to begin on August 31.

Members will earn 1 point for every dollar spent in-store and online (excluding some items) at Woolworths, BWS and Woolworths Caltex co-branded fuel outlets.

Members can choose to convert their savings to Qantas Points, with every 2,000 points equalling $10 Woolworths Dollars, in turn equalling 870 Qantas Points. 

“We are pleased that our members have responded positively to automatically getting money off their shopping,” Fairfax reported Woolworths director of loyalty and customer data Ingrid Maes as stating.

“However, we’ve acknowledged that we didn’t deliver enough orange ticket offers in-store and while many of our members have been rewarded well, too many have not.

“By introducing a guaranteed reward per dollar spent at Woolworths supermarkets, BWS and selected Caltex Woolworths sites, all members receive a reward when shopping with us.”

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