Big W to shut stores and SA distribution centre

Woolworths has delivered a jolt to Australia’s discount department store sector, announcing it will close its SA distribution centre — affecting more than 200 staff — along with a swag of Big W stores nationally.

Big W’s Monarto distribution centre will close in 2021, affecting more than 200 staff, as Woolworths Group plans wide-scale store closures across the country.

Woolworths Group this morning announced to the Australian Securities Exchange it would shut the distribution centre in Monarto and another in Warwick, southwest of Brisbane.

Another 30 Australian stores would close over the next three years, but the company is yet to announce which ones.

There are 16 Big W stores in metropolitan and regional South Australia.

Monarto’s distribution centre employs 212 staff.

Woolworths will close about 30 Big W stores over the next three years. Picture: Supplied.

The company reported sales growth of about 6 per cent in the quarter ending March 2019.

However, the profit improvement was slower than planned.

BIG W was this financial year expecting a loss before interest and tax, of $80-$100 million. Last financial year it lost $110 million.

Woolworths Group chief executive Brad Banducci said the company would attempt to redeploy team members where possible.

“This decision will lead to a more robust and sustainable store and distribution centre network that better reflects the rapidly changing retail environment,” Mr Banducci said.

“It will accelerate our turnaround plan through a more profitable store network, simplifying current business processes, improving stock flow and lowering inventory.”

The Monarto distribution centre would close in June 2021, at the end of its lease, and Warwick’s centre would shut two years later.

Murray Bridge Mayor Brenton Lewis said the loss of the Monarto centre was another blow to the region following a fire that ripped through Thomas Foods in January 2018.

“In a role as mayor you always try and make some positive out of everything you can but it’s a challenge to make positive comments at a time like this,” Mr Lewis said.

“(But) at some stage that building will be available and it’s a magnificent complex that will lend itself to other development in the future.”

Woolworths Group said details of store closures would not be released due to ongoing discussions with landlords.

It did not say when details of its planned store closures would be made public.

A Big W store in 1978.

Big W has reported two years of losses. Picture: Bradley Hunter

A company spokesman said Woolworths understood the impact its decision would have on its staff and local communities.

“It is a difficult but necessary step that will position our distribution centre network closer to more of our stores and help underpin the viability of BIG W into the future,” the spokesman said.

“We want to create a stronger, profitable and more sustainable BIG W and remain committed to the long-term future of the brand.”

The Shop, Distributive and Allied Employees’ Association said the union would work to ensure Big W employees received their entitlements and were supported throughout the process.

“The union will be working closely with the company and members to identify suitable

redeployment opportunities for Big W staff wherever possible,” a spokesman said.

There are 183 Big W stores across Australia at the moment and the retailer is yet to say how many jobs are likely to go.

The decision to close the stores and distribution centres will see the retailing heavyweight take a $370 million hit in its full-year results.

It says the hit will be comprised of $270 million in lease and exit costs as it pulls down the shutters on about 16 per cent of its department store network, plus $100 million in impairments.

Woolworths has also confirmed a $1.7 billion share buyback following the sale of its fuel operations.

The company’s decision to shrink the Big W store network comes amid a painful period in the Australian discount department store sector.

While Kmart has performed well for rival retailing heavyweight Wesfarmers, sister chain Target has struggled for years.