Major department store Big W will close at least 30 of its stores over the next three years due a massive slump in profits, as consumers increasingly do their shopping online.
The discount store, operated by the Woolworths Group, will cease business in a number of locations throughout the country in a bid to create a more profitable store network.
In a statement released on Monday, the retail company confirmed the news, announcing the closure of the stores and two distribution centres (DCs) which will shut their doors for the final time when the lease expires.
While Big W has experienced a small growth in sales of 6 per cent, the company claimed the profit improvement has not been enough. As a result, 16 per cent of the current store network will shut up shop for good.
This will lead to a blow to the company’s profits of $270 million in lease and exit costs, plus an additional $100 million of non-cash asset impairments.
Speaking out about the decision, Woolworths Group Chief Executive Officer Brad Banducci said after much effort to keep the stores running, the time has come to make a change. He also claimed while the move will ultimately affect many of its employees they will do their best to accomodate these people with further employment into the future.
“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,” he said in a statement.
“We understand the impact that the store and DC closures will have on our team and will endeavour to provide affected team members with alternative employment options within the Woolworths Group where possible.”
Although sad news for shoppers, Banducci said it will help the supermarket in the long run.
“This decision will lead to a more robust and sustainable store and DC network that better reflects the rapidly changing retail environment,” he added. “It will accelerate our turnaround plan through a more profitable store network, simplifying current business processes, improving stock flow and lowering inventory.”
Details of the exact stores set for closure are yet to be released as final decisions with landlords are made. In the mean time, all stores and DCs will continue to trade as normal.