Woolworths is getting out of the home improvement market, announcing plans to either sell or wind up its Masters Home Improvement and Home Timber & Hardware chains.
In a statement released today, Chairman Gordon Cairns said it would simply take too long for Masters to become profitable.
“Our recent review of operating performance indicates it will take many years for Masters to become profitable. We have determined we cannot continue to sustain ongoing losses from this business,” Mr Cairns said.
“We intend to pursue an orderly prospective sale or wind-up of the business. This enables full ownership of the business by Woolworths in a shorter timeframe and gives us access to the widest range of exit options.”
Woolworths had partned with US hardware giant Lowe’s for the Masters Home Improvement stores, which were supposed to challenge the Westfarmers-owned Bunnings chain.
Woolworths’ exit strategy will include buying back a 33.3 per cent interest in its home improvement arm held by WDR Delaware Corporation, a subsidiary of Lowe’s.
Mr Cairns acknowledged that the process of winding up Woolworths’ home improvement chains won’t happen overnight.
“Whilst we will move as quickly as possible, the put and call options process will take at least two months to complete and following this a potential sale process or other exit process will take additional time.
“The business will continue to trade through this period. Our top priority is to do the right thing by all stakeholders.”
Shareholders have been bullish on the move, with Woolworths defying widespread falls on the stock market to post a 4.94 per cent gain as of 11:35am (AEDT).
Mr Cairns said the decision to pull out of home improvement will allow Woolworths to focus on its core businesses, including its supermarket chain, which is facing stiff competition from Coles and Aldi.
Will you be sad to see Masters go? Have your say in the comments below!