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January 31, 2012, 12:15 am
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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
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
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.
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