Supermarket giant, Woolworths, will close six Countdown supermarkets before the end of their lease terms and is looking to sell its New Zealand-based Ezibuy clothing business as part of yesterday’s restructuring announcements that will slash 500 jobs and incur a charge of $959 million in its full year results.
Brad Banducci, Woolworths CEO, said the company has written off A$309 million (NZ$329.6 million) from the value of EziBuy and announced it had split EziBuy from its Big W business because “expected synergies between these two had not been realised and in many cases, have resulted in dis-synergies for both businesses”.
“Given our decision to separate Ezibuy from Big W and the significant deterioration in the trading performance of the business, we have impaired the goodwill and other intangible assets of Ezibuy by $309 million. We are currently exploring options for the sale of the business,” Banducci said.
EziBuy is expected to report an annual loss of between NZ$13 million and NZ$18 million before significant items when Woolworths reports its results on August 25. Big W is expected to report a loss of between $12 million and $17 million.
Woolworths’ earnings before interest and tax from continuing operations, before significant items, would be between A$2.55 billion and A$2.57 billion in 2016, Banducci stated.
According to Banducci, Woolworths exited three stores in the fourth quarter of 2016 and will exit another 30 stores across the group, excluding Big W, prior to the end of the lease term which will result in costs of approximately $196 million in FY 2016.
Among the 30 stores are six Countdown supermarkets in New Zealand, 17 Australian Supermarkets, four Australian Metro stores and three hotels.
The retailer said it will cut 500 jobs from its support office and supply chain, while a further 1000 will be shifted from the group office into its businesses. The company said it is continuing a review of all back office roles, which could put more jobs at risk
The major restructuring is part of the retailer’s five-year turnaround plan.