Woolworths in Australia has announced it will close as many as 30 stores, including four Metro sites, and will axe 500 head office jobs amid a company restructure. Six New Zealand Countdown supermarkets will also close, as well as three hotel sites.
Woolworths CEO, Brad Banducci, said the company has significantly slowed its supermarket rollout program to focus on renewing existing stores. “We will close some underperforming and non-strategic stores and cancel or defer pipeline stores to allocate more capital to renewing our existing store network,” Banducci said.
There is uncertainty around whether the company would renew the leases at the end of the lease term in 34 other underperforming stores, of which Australian supermarkets account for 15 sites with a further five Metro sites, three New Zealand supermarkets, one hotel site and 10 fuel sites. The company has also identified 20 sites where development will be deferred or no longer proceed. “The actions announced result in Woolworths recognising a significant item of $959 million or $766 million after tax in our financial year 2016 results. $571 million of the pre-tax number will be non-cash,” Banducci said. “While we have had to make some tough decisions and this has ramifications for many of our team, 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. This will be a three to five year journey and we are determined to drive sustainable improvements in sales per square metre and return on funds employed to deliver value for shareholders.”
As part of the cost cutting programme the supermarket giant has also confirmed 500 jobs will go from its support office and supply chain, while 1000 employees will be moved from the group office into businesses. Woolworths will also close its Hume Distribution Centre in Victoria in 2019.