Woolworths has this morning announced it will close 30 of its troubled Big W stores at a loss of $370 million.
In a statement to the ASX, Woolworths said the store closures would happen over the next three years and include the closure of two distribution centres.
It’s been reported that many of the store closures will happen in regional areas where the discount retailer has struggled against cheaper, online alternatives.
The $370 million loss will come from $270 million in lease and exit costs and $100 million of non-cash asset impairments.
Woolworths chief executive Brad Banducci said in the trading update: “As foreshadowed at our half-year 2019 results, while the recovery in trading for Big W is encouraging and there remains further opportunity for improvement, the speed of conversion to earnings improvement is taking longer than planned.
“We understand the impact that the store and DC [distribution centre] closures will have on our team and will endeavour to provide affected team members with alternative employment within the Woolworths Group where possible.
“This decision will lead to a more robust and sustainable store and DC network that better reflects the rapidly changing retail environment. It will accelerate our turnaround plan through a more profitable store network, simplifying current business processes, improving stock flow and lowering inventory.”
According to a report on SMH, Woolies shares rose 2.1 per cent on the news of the announcement.