Landlords await news of first Big W closures

Woolworths could announce as early as this week which Big W stores it plans to close first.

A Big W department store in Brisbane.

Woolworths could announce as early as this week which Big W stores it plans to close first, as part of its attempts to resurrect profits at the loss-making retailer by slashing its store network.

Shopping centre landlords are already in talks to bring new tenants into empty Big W stores that have wound up on the hit list.

The first Big W sites will now shut in January, and several shopping centre landlords in NSW and Victoria are preparing a charm ­offensive to allay the fears of nervous retail tenants that the disappearance of Big W will dry up foot traffic to their own stores.

Leasing agents such as Jones Lang LaSalle have been engaged to sign up new retailers.

The agents have begun talks with national chains and while at this stage no leases have been signed, the documentation is in train to ensure a smooth transition as the Big W stores close and vacant spaces begin opening up in regional shopping centres.

Woolworths chief executive Brad Banducci said in April that following a review of the struggling Big W, it had identified roughly 30 stores it would close over the next three years, as well as two distribution centres.

Analysts had predicted Woolworths could be forced to close down one-third of its 183 Big W stores at a cost of almost $800 million as the losses at Big W mount.

The stores posted a full-year loss of $110m for the 2018 fiscal year and a loss of $151m in 2017. Big W has recorded a loss of $8m for the first half of this year.

The underperforming general merchandise chain is forecast to report a loss again for fiscal 2019, with the guidance indicating it would be under the $110m loss ­recorded in 2018. The chain in April booked $100m in asset ­impairments for the 2019 financial year, reflecting its poor trading performance.

Many shopping centre landlords and leasing agents were ­expecting an announcement from Woolworths on Monday in regards to which Big W sites would be closed, as negotiations with new tenants to take up the vacant space accelerate.

The Australian has learned that one letter from a shopping centre manager alerted staff that its Big W store was to be shut within six months but that new tenants were being lined up to protect foot traffic in the centre.

Some national retailers are poised to announce they will take up certain Big W stores and are awaiting official confirmation by Woolworths in the coming days.

The closure of 30 Big W stores comes as Mr Banducci unveiled plans this month to merge Woolworths’ Endeavour Drinks division, which owns Dan Murphy’s and BWS, and ALH Group, Australia’s largest poker machine ­operator and hotel owner, into a new drinks and entertainment business that could be sold off or floated on the ASX.

However, he maintained that Woolworths wanted to hold on to Big W despite its losses and the hundreds of millions of ­dollars in ­impairment charges.

Last night a Big W spokesman told The Australian that no leases had been signed for the Big W stores being shut down.

“On April 1, as part of a network review, Big W announced the intention to close up to 30 stores and two distribution centres over the next three years,” the spokesman said.

“The purpose of this review is to build a strong, profitable and more sustainable Big W store and distribution centre network that reflects our customers’ needs and the rapidly changing retail environment.

“As soon as a signed agreement with a landlord has been reached, we are committed to ­informing our store team and the local community with a minimum of three months’ notice.”