Woolies rakes in $700m from Masters firesale

Woolworths has notched a better-than-expected 90c-in-the-dollar return from its sale of unwanted Masters stock.

Masters stores have been selling off stock before Sunday’s closure. Picture: Brendan Radke

Woolworths has pulled a victory from the Masters fire sale, notching up a better-than-expected 90c in the dollar return from the liquidation of about $700 million worth of unwanted hardware stock as the failed chain prepared to close its doors for the final time on Sunday.

The fire sale at Masters was conducted by GA Australia, which took on the role of selling the $700m worth of hardware tools, furniture, whitegoods and gardening products with Woolworths ­expecting a return of at least $500m.

When the realisation of Masters goods began Woolworths conducted a stocktake to construct a baseline for GA Australia, and it calculated that Masters had in excess of $1.25 billion in inventory at retail prices in its 63 Masters stores, distribution centres and on order.

Sources told The Australian the disposal of Masters products since the closing-down sale kicked off in late August has outperformed internal Woolworths expectations, also exceeding the typical returns booked by businesses liquidating all their stock in the lead-up to a complete company closure.

With only five days to go until Masters closes its doors forever, Woolworths is now expecting a return of at least 90c in the dollar on the cost of the hardware goods — which is above the retailer’s expectations when chairman Gordon Cairns decided to pull the plug on the loss-making Masters in August and shut it down.

Meanwhile, of the 5500 Masters staff who were employed at the national hardware chain, just over 2500 asked to be redeployed within the Woolworths retail empire, with 1700 so far finding new roles.

It comes as Woolworths and its joint venture partner in Masters, US hardware giant Lowe’s, remain locked in a legal battle over the planned closure of the business with the next hearing behind closed doors to be held in March before former High Court justice Murray Gleeson in a confidential arbitration process.

When Woolworths kicked off its Masters hardware business in 2009 it owned two-thirds of the company, while Lowe’s held one-third and provided much of the expertise, given its long history in the hardware sector and Woolworths’ lack of experience.

But less than a week after Woolworths announced its decision to close Masters in August, its partner Lowe’s launched action in the Federal Court against Woolworths, accusing it of “oppressive conduct” over the shutdown of their jointly owned Masters hardware chain.

Lowe’s told the court Woolworths had wrongfully attempted to terminate the joint venture. It was displeased by how Woolworths had disposed of the Masters properties, namely a deal with high net worth individuals, investors and families to sell the property portfolio for $750 million.

Those properties are set to be sold to a consortium led by former UBS Australia boss David Di Pilla and including the billionaire owners of Spotlight, Chemist Warehouse and a range of private investors.

Mr Di Pilla had sealed rental agreements from a host of retail tenants such as JB Hi-Fi, Spotlight and Anaconda to open new stores where Masters once operated, creating a vast retail property business with more than 700,000 square metres of space.

But this was all done by Woolworths before any deal was struck with its partner, Lowe’s.