Woolworths also identified five Big W stores that would probably close in the next three years, and another 18 stores have been written down.
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While they have not made any comment on which stores across the country will close but would confirm that the number is expected to be 27.
“We have already informed our [Rangiora Central] team and are working with them to redeploy team to other Countdown stores nearby”, he said.
Analysts think the tough decisions have been made on hardware, and now the troubled Big W business will be revamped and the troubled EziBuy business will be shoved out the door, weak supermarkets are being closed and more will be spent on revamping existing ones (but successive Woolies managements have talked about doing that because it is a pretty cost effective way of boosting sales growth in the short term).
Woolworths chief executive Brad Banducci said: “We are confident we are putting in place solid foundations for the future and early results give us confidence we are on the right track”, he said in a statement.
This is despite the supermarket giant predicting it will earn more than $2.5 billion for the year. These costs primarily relate to the planned store closures of underperforming and non-strategic stores as well as the deferral and exit of non-core property development assets in line with the revised property network plan.
As part of the restructure, Woolworths has also spun out its online EziBuy business from Big W at a cost of AU$309 million to the organisation.
Ezibuy has stores in Auckland, Wellington, Palmerston North and Christchurch. “ROFE (Return on Funds Employed) for Endeavour Drinks Group will be reported separately from H117”, Banducci said.
EziBuy is one of the largest multi‐channel retailer in Australasia, it was bought by Woolworths three years ago.
Six Countdown supermarkets in New Zealand will be closed while the company will look to sell its New Zealand clothing and homeware retailer EziBuy.
The charge will result in a $766 million hit on after tax profit, with fiscal 2016 earnings before interest and tax now expected to be in the range of $2.55 billion to $2.57 billion.
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