Woolworths plans to sell off its Dick Smith consumer electronics division as the supermarket giant steps up its price war with rival chain Coles. Its latest sales growth fell short of expectations, underscoring the urgency of the revamp.
The Sydney-based retailer said it was considering several unsolicited offers for Dick Smith, and would aim instead to sell consumer electronics through its Big W and online operations.
Woolworths said as many as 100 underperforming Dick Smith stores out of
386 in Australia and New Zealand will be closed as part of an accelerated rationalisation of the business before sale. Affected staff would be offered redeployment elsewhere in the group.Woolworths shares rose in morning trade, adding as much as 2.1 per cent, or 52 cents, to $24.97. Shares of Wesfarmers, owner of Coles, gained 0.6 per cent, or 19 cents, to $30.36.
"The investment and management attention given to Dick Smith have been disproportionate relative to its position within the Woolworths Group," said Woolworths chief executive Grant O?Brien, stating the company's intent to focus on growing the core supermarket business.
"We believe that separating this speciality business model from Woolworths is now the best option for the future of both businesses", he said.
Woolworths said it would take a restructuring charge of $300 million in the first half of its current business year as part of the Dick Smith overhaul.
A string of retailers from Kathmandu to JB Hi-Fi have had to cut their profit targets for this business year as consumers hold back on spending or buy more for online rather than so-called "bricks and mortar" outlets.