Business InsiderTop News

Wesfarmers expects up to $315 million impairment in 2020 as part of Target review

imageStock Markets8 hours ago (May 22, 2020 12:05AM ET)


(C) Reuters. A newly constructed Target store is shown in San Diego, California


By Byron Kaye

SYDNEY (Reuters) – Australian retail giant Wesfarmers Ltd (AX:WES) said it will close or rebrand nearly two-thirds of its Target department stores and take one-off charges totalling up to A$650 million ($426 million) as it reels from the coronavirus fallout.

The move strikes a blow to what was once among Australia’s most durable retail brands and reflects the urgency of brick-and-mortar stores around the world to adapt as sweeping virus-related curbs on movement keep shoppers at home.

With 284 stores nationwide, Target is the country’s largest department store network but its owner fast-tracked a review of operations in April after the shutdown intended to contain the virus accelerated a sales slump.

Wesfarmers said it will convert up to 92 Target stores to its low-cost Kmart department store chain, and shut up to another 75 Targets, leaving as few as 117 Target outlets.

The retailer will see an impairment charge of up to A$480 million to reflect a lower value of the Target brand and other assets, plus A$170 million, before tax, in inventory write-offs and other restructuring costs for the year ending June.

“The actions … reflect our continued focus on investing in Kmart, a business with a compelling customer offer and strong competitive advantages, while also improving the viability of Target,” Wesfarmers Managing Director Rob Scott said in a statement on Friday.

“For some time now the retail sector has seen significant structural change and disruption, and we expect this trend to continue.”

Target’s problems were worsened by COVID-19 but began before the health crisis. In the six months to December, Target’s sales dropped sharply as it lost business to low-cost rivals like Inc (O:AMZN) and Kmart.

Wesfarmers’ Target is not related to the U.S. chain Target Corp (N:TGT).

Wesfarmers shares were flat on Friday, versus a broader market (AXJO) decline of 0.7%.

Australia’s Wesfarmers to shut or rebrand over 100 Target stores in virus slump

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Related Articles

Back to top button

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.

Your information is secure and your privacy is protected. By opting in you agree to receive emails from us and our affiliates. Remember that you can opt-out any time, we hate spam too!