Target stores set to close or be rebranded Kmart as part of Wesfarmers overhaul

Up to 75 Target stores will be shut down and almost 100 converted into Kmarts under a major overhaul that could spell the end for the struggling retail brand.

About half the Target store network will disappear and up to 1300 jobs will be lost under a major restructure of the struggling discount department store chain.

Owner Wesfarmers this morning unveiled plans to shut up to 75 Target stores and convert as many as 92 to its highly successful Kmart brand in a major restructure.

There are 285 Target stores across Australia, with 69 in Victoria.

Wesfarmers said it will close 10 to 25 large format stores and 50 small format Target Country stores.

It had 183 large format stores and 102 small format stores at the end of 2019, its latest financial accounts show.

Another 10 to 40 Target stores and 52 Target Country stores will be converted to the Kmart brand.

The dramatic overhaul will result in all small-format Target locations in regional areas being shut or converted to Kmart.

The changes will be implemented over the next 12 months with the bulk of the restructure to be carried out in 2021.

As many as 92 Target stores will be turned into Kmart outlets.

Wesfarmers did not provide individual details around which stores will be shut or converted.

It also warned that many store conversions will only be possible if landlords are willing to help should the cost of the new fitouts.

Staff in Target stores being converted will be employed by Kmart, while it will work to deploy Target staff in stores being closed to other Wesfarmers businesses which include Bunnings, Officeworks and online retailer Catch Group.

That, however, is still expected to result in 1000 to 1300 job losses, or about 10 per cent of Target’s current workforce.

Wesfarmers chief executive Rob Scott said Target was not commercially viable in its current format.

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

“With the exception of Target, Wesfarmers’ retail businesses are well positioned to respond to the changes in consumer behaviour and competition associated with the disruption.”

Mr Scott also warned more Target stores could close

“The group is continuing its assessment of strategic options for a commercially viable Target and its remaining store network, including further optimisation of the store network and changes to the operating model,” he said.

Target traces its roots back to Geelong when George Lindsay and Alex McKenzie opened a drapery store there in 1926 under a business model of half the profit, twice the turnover.

It was bought by Myer in 1968 and become Target in 1973.

It has lost close to $1 billion in sales since 2011 when Zara spearheaded a global fast-fashion invasion while Wesfarmers overhauled Kmart to become the undisputed leader in the nation’s discount department store space.

The restructure will cost Wesfarmers between $120 million to $170 million.

The Perth-based conglomerate will also take a non-cash impairment of between $430 million and $480 million on its department store division as it writes down the value of the Target brand.

TARGET STORE CHANGES IN VICTORIA (PRELIMINARY LIST)

STORES CLOSING

Bacchus Marsh

Bairnsdale

Benalla

Colac

Kerang

Langwarrin

Maryborough

Myrtleford

Traralgon

Warragul

STORES CHANGING TO KMART

Ararat

Castlemaine

Cobram

Echuca

Hamilton

Kyabram

Lakes Entrance

Leongatha

Mansfield

Portland

Seymour

Woodend

Yarrawonga

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Originally published as Target stores set to close or be rebranded Kmart as part of Wesfarmers overhaul