Woolworths has categorically rejected a report that it is considering selling BIG W, saying the discount department
store chain is integral to its growth strategy.
According to a report in The Australlian on Wednesday, Woolworths has been in talks with at least two corporate advisory
firms about BIG W amid rumours it may mull na intial public coffer,a demerger or divestment.
"Woolworths has no plans to sell BIG W , and notes that this market rumour is incorrect," the company said in a statement
the Australian Securities Exchange.
" Our general merchandise businesses,BIG W and EziBuy, are important to delivering our strategy to drive growth by giving
customres access to Australasia's best multi-option apparel and general merchandise offer," Woolworths said.
Earnings from BIG W have fallen 14 percent in the last years amid increased competition from online rivals and Wesfarmers's
Kmart chain and steep price drops in categories such as entertainment and apparel.
However,Woolworths has put in place plans to restore sales and earnings growth and has hired a UK retail veteran as managing
director following the departure of Julie Coates in May.
The new BIG W managing director,Alastair McGeorge,had been consulting to BIG W for several months before his appointment in
May and commenced his new role last month.
Mr McGeorge was chairman and chief executive of global apparel retailer New Look and previously ran British fashion and
homewares retailers Matalan and Littlewoods.
In April last year Woolworths outlaid $318 million for catalogue and online retailer Ezibuy to drive online sales growth in its general
merchandise business.Ezibuy has since been merged with BIG W.
But Woolworths chief execultive Grant O'Brien has been selling non-core assets as part of a strategy to act on retailer's portfolio to
maximise value for shareholders.
Over the last three years Woolworths has sold more than $600 million of freehold property and offloaded its underperforming
consumer electronics business,Dick Smith,to private equity firm Anchorage Capital Partners for $94 million.
Mr O'Brien has warned that the transformation under way at BIG W will hurt earnings again this year but he says the turnaround
plan will ensure BIG W is well placed to deliver profitable growth in the future.
BIG W is culling floor space in categories such as entertainment and devoting more loor s[ace for toys and foot wear ,rejigging its
supply chain and implementing a new merchandises system.
Woolworths's return on funds employed at BIG W has fallen to 13.8 percent from more than 20 percent ,diluted by the Ezibuy
acquisition.However,unlike Dick Smith,BIG W is still delivering returns above its cost of capital.
