First Big W store closures now in motion
Written on the 18 July 2019 by Matt Ogg
Three Sydney outlets will be the first to go as part of Woolworths Group's (ASX: WOW) plan to shut 30 Big W stores nationwide.
In an announcement today, the retail and poker machine company said agreements had been reached to close stores in Chullora, Auburn and Fairfield in January 2020.
The stores will continue trading for the next six months.
"These are not decisions we take lightly and we regret the impact the closures will have on affected team members," says BIG W managing director David Walker.
"We would like to acknowledge the support of the communities of Chullora, Auburn and Fairfield and the hard work and commitment of our store team members.
"Over the next six months, we will support our team and explore redeployment opportunities with team members who choose to continue their career at BIG W or with other Woolworths Group brands in the months ahead."
The Big W business is expected to record a loss before interest and tax of $80-100 million in FY19, compared to a figure that was $110 million in the red in the previous financial year.
The group is willing to take a $270 million profit and loss charge hit to close down the 30 stores identified with lower performance, along with two distribution centres in Warwick, QLD and Monarto, SA.
In relation to the Auburn closure, the shopping centre owner Elanor Retail Property Fund (ASX: ERF) noted the deal represented an early surrender of Big W's lease, which was originally meant to last until 2024.
Elanor Retail described described the upcoming Big W closure as a "positive catalyst for the transformation of Auburn Central" as redevelopment works will begin in February with an expected completion by the end of the 2020 calendar year.
"The potential to improve sales productivity from the DDS [discount department store] tenancy at Auburn Central was identified as a strong value-add opportunity for the investment," says Elanor Investors Group (ENN) CEO Glenn Willis.
"The successful negotiation for the early surrender of the BIG W lease has now facilitated our repositioning strategy at Auburn Central.
"The introduction of additional non-discretionary retail uses at the centre will generate higher sales productivity and increased rental income, thereby adding significant value for ERF investors."
Business News Australia
Author: Matt Ogg