Target closes 167 stores in massive company restructure

Scores of Target stores will shut forever and 92 could be converted into Kmarts, according to a shock announcement made today.

Australian Target fans are in mourning today after parent company Wesfarmers announced up to 167 stores could disappear forever over the next year.

Under the drastic plan, up to 75 Target stores will be closed down while 92 will be converted into Kmart outlets, meaning around half of Target’s 284-odd Australian stores could be affected.

The shock announcement regarding the struggling discount department store chain was made by Wesfarmers – which owns both Target and Kmart – in a note to investors on Friday morning.

It also revealed $780 million of writedowns on its Kmart Group and industrial and safety branch, and a number of plans designed to “accelerate the growth of Kmart” and “address the unsustainable financial performance of Target”.

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They include converting “suitable” Target and Target Country stores to Kmart stores, the closure of between 10 to 25 large format Target stores, the closure of the remaining 50 small format Target Country stores, and a “significant restructuring of the Target store support office”.

Wesfarmers managing director Rob Scott said the changes would “enhance the overall position of the Kmart Group, while also improving the commercial viability of Target”.

Dozens of Target stores will close within 12 months. Picture: Cameron Bates

“For some time now, the retail sector has seen significant structural change and disruption, and we expect this trend to continue. With the exception of Target, Wesfarmers’ retail businesses are well-positioned to respond to the changes in consumer behaviour and competition associated with this disruption,” Mr Scott said.

“The actions announced 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 by addressing some of its structural challenges by simplifying the business model.

“The reduction in the Target store network will be complemented by increased investment in our digital capabilities, following the continued strong growth in online sales across the Kmart Group and the pleasing progress in Catch since its acquisition in August 2019. The expansion of our digital offer will provide customers with access to the Kmart and Target products they love, together with over two million products from the Catch marketplace, via home delivery or click and collect.”

A Target spokeswoman told news.com.au in a statement said the decision had been a difficult one.

“During this difficult time, we are committed to supporting our team. Across the Kmart Group we have made a significant effort to avoid store closures and retain our people and for impacted store team members we have the benefit of time to help find alternative employment opportunities,” the spokeswoman said.

“All team members in Target stores scheduled for conversion to Kmart will be offered the opportunity to join the growing Kmart team, for other affected Target team members, we will work with them to identify and offer other redeployment opportunities in Kmart, Catch, Bunnings and Officeworks as these businesses continue to grow.

“We believe that Target has a future as a leading retailer in Australia and we know it is loved by so many, but a number of actions are required to ensure it is fit for purpose in a competitive, challenging and dynamic market, including a smaller number of stores and a stronger online business.”

The investor note also revealed Wesfarmers expected restructuring costs and provisions in Kmart Group of approximately $120 to $170 million before tax, non-cash impairment in between $430 to $480 million before tax, non-cash impairment in the Industrial and Safety division of approximately $300 million before tax.

Kmart Group is also expected to incur one-off non-operating costs of approximately $120 to $140 million relating to the conversion of stores and stock clearance activity prior to closure or conversion.

Some Target stores will shut within weeks.

The Target restructure is expected to take place over the next 12 months, although most activity is expected to occur next year.

The company also confirmed that while the decision would significantly impact staff, all team members in Target stores scheduled for conversion to Kmart would receive an offer of employment from Kmart, while those from closing stores would be “given consideration for new roles”.

Kmart Group managing director Ian Bailey said the company had made a “significant effort to avoid store closures, retain our valued team members, keep serving our customers and supporting our suppliers”.

“Unfortunately, the disruptive and competitive nature of the retail sector requires us to make some difficult decisions to ensure we have a viable Target business into the future, while continuing the strong growth of Kmart and Catch,” Mr Bailey said.

“We continue to believe that Target has a future as a leading retail brand in Australia and is much loved by many customers, but a number of actions and changes are required to ensure it is fit for purpose in a competitive, challenging and dynamic market, including a smaller number of stores and a stronger online business.”

WHICH STORES ARE CLOSING?

So far, Target has confirmed 53 stores across all states and territories except the Northern Territory.

They include:

NSW:

• Armidale, early-mid 2021

• Campbelltown, July 2020

• Cooma, early-mid 2021

• Cootamundra, early-mid 2021

• Corowa, early-mid 2021

• Deniliquin, early-mid 2021

• Forbes, early-mid 2021

• Leeton, early 2021

• Merimbula, early-mid 2021

• Morisset, early-mid 2021

• Narrabri, early-mid 2021

• Nowra, early-mid 2021

• Salamander Bay, early-mid 2021

• Scone, early-mid 2021

• Wagga Wagga, early-mid 2021

• Winmalee, early-mid 2021

QLD:

• Atherton, early 2021

• Beaudesert, early-mid 2021

• Biloela, early 2021

• Casino Retail Centre, early-mid 2021

• Clifton Beach, early-mid 2021

• Emerald, early-mid 2021

• Goonellabah, early 2021

• Kippa Ring, early 2021

• Longreach, early-mid 2021

• Moranbah, early-mid 2021

• Murgon, early-mid 2021

• Murwillumbah, early 2021

VICTORIA:

• Bacchus Marsh, early-mid 2021

• Bairnsdale, early-mid 2021

• Benalla, mid 2021

• Colac, early-mid 2021

• Kerang, early-mid 2021

• Langwarrin, early-mid 2021

• Maryborough, early-mid 2021

• Myrtleford, early-mid 2021

• Traralgon, early-mid 2021

• Warragul, early-mid 2021

WA:

• Busselton, early 2021

• Karratha, early-mid 2021

• Kununurra, early-mid 2021

• Manjimup, early-mid 2021

• Margaret River, early-mid 2021

• Meadow Springs, August 2020

• Merredin, early-mid 2021

• Narrogin, early-mid 2021

SA

• Clare, early-mid 2021

• Millicent, early 2021

• Naracoorte, early-mid 2021

• Pasadena, June 2020

• Port Lincoln, early 2021

TASMANIA:

• Davenport, early-mid 2021

ACT:

• Weston Creek, early-mid 2021

WHICH STORES WILL BECOME KMARTS?

Again, most states and territories are affected except the ACT and Tasmania.

VICTORIA:

• Ararat, early-mid 2021

• Castlemaine, September 2020

• Cobram, July 2020

• Echuca, July 2020

• Hamilton, early 2021

• Kyabram, September 2020

• Lakes Entrance, early 2021

• Leongatha, early 2021

• Mansfield, early 2021

• Portland, early 2021

• Seymour, early 2021

• Woodend, September 2020

• Yarrawonga, early 2021

QLD:

• Ayr, early-mid 2021

• Beerwah, early-mid 2021

• Bowen, early 2021

• Charters Towers, early 2021

• Chinchilla, early 2021

• Dalby, early 2021

• Gatton, early 2021

• Goondiwindi, early 2021

• Gympie, early 2021

• Ingham, ealry 2021

• Mareeba, early 2021

• Noosa Junction, early 2021

• Ocean Shores Village Ctr, early 2021

• Port Douglas, early 2021

• Roma, early 2021

• Sarina,early 2021

• Stanthorpe, early 2021

• Warwick, early 2021

• Yamba, early 2021

• Yeppoon, early 2021

NSW:

• Bega, early-mid 2021

• Bowral, early 2021

• Gunnedah, early 2021

• Katoomba, early 2021

• Moree, early 2021

• Mudgee, early 2021

• Picton, early 2021

• Tumut, early 2021

• Ulladulla, early 2021

• Windsor Town S/C, early 2021

• Yass, early 2021

SA:

• Berri, early 2021

• Murray Bridge, early 2021

• Port Augusta, early 2021

• Victor Harbour, early 2021

WA:

• Esperance, early 2021

• Geraldton, early-mid 2021

• Northam, early 2021

• Pinjarra, early 2021

NT:

• Katherine, early 2021

Originally published as Target closes 167 stores in massive company restructure