The department store has been struggling recently and it’s being reported by The herald sun that the chain will be shutting one-third of its 183 stores in an attempt to bring it back to profitability.
Macquarie Wealth Management said in a client note that 60 stores would be closed, but the company would have to pay out the remaining $2.7 billion in lease contracts.
Big W lost $110 million last financial year and $8 million in the first half of 2019.
“Partial closure of the most unprofitable and shorter lease stores is more likely,” Macquarie said in the note.
“Given significant closure costs for the portfolio, a more likely scenario is Woolworths to close up to one-third of its stores (60 stores), in our view. This cost could be around $759 million.”
“The market may like the removal of uncertain downside given the challenging industry outlook”.
It’s believed that stores in regional areas are the most vulnerable to getting the axe.
A Woolworths (who own Big W) spokeswoman said, “At our half-year results in February we announced a national review of our Big W store and distribution centre network.
“The review is ongoing and no decisions about our network have been made. We will update our team members and the market once the review has been completed.”
At the moment, a list of 30 regional stores have been listed as being at risk of closing.
THE 30 REGIONAL STORES AT RISK:
Tweed Head, NSW
North Rockhampton, QLD
Port Augusta, SA