Finance Finance News Big W announces first three victims of its 30-store closure plan

Big W announces first three victims of its 30-store closure plan

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Big W has announced it will close three Big W stores in Sydney in 2020. Photo: AAP
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Big W has announced it will close three stores in western Sydney next year, roughly three months after revealing it would cull up to 30.

Retail giant Woolworths said it would close its Big W stores in Chullora, Auburn and Fairfield, after having reached an agreement with landlords to shut down operations in six months’ time.

“These are not decisions we take lightly and we regret the impact the closures will have on affected team members,” Big W managing director David Walker said in a statement.

“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 Elanor Retail Property Fund made a similar announcement, telling the ASX on Thursday that the Big W in Auburn Central shopping centre would close at the end of January 2020 – describing the closure of the 7159-square-metre store as “a positive catalyst for the transformation of Auburn Central into a Sydney metropolitan, dual supermarket, neighbourhood shopping centre”. 

The closures are the first of 30 that Woolworths plans over the next three years, and part of a broader review aimed at building a more sustainable and profitable network of stores.

But according to a senior industry analyst, Woolworths would have to close more than 30 Big W stores if it was serious about boosting its profitability.

“Thirty stores is surprising, because most analysts expected it to be more,” IBISWorld senior industry analyst Kim Do said in the wake of April’s announcement.

“They’ve said they’ll close 30 in the next three years, but IBISWorld predicts that number will grow in the next five years if their profits don’t improve.”

Woolworths Group CEO Brad Banducci said in April that the group’s plans – which also involve closing down a distribution centre in Monarto, South Australia, and one in Warwick, Queensland – would incur a “one-off pre-tax charge of approximately $370 million”.

But he said the group’s plans would better reflect “the rapidly changing retail environment” and “accelerate our turnaround plan through a more profitable store network”.

Woolworths has 183 Big W stores located across Australia. The division lost $110 million in the last financial year.

Woolworths shares were down 0.61 per cent to $34.09 at 1310 AEST on Thursday.

-with AAP