Discount department store covets Big W.
Kmart CEO Guy Russo has set a target to drive revenue to $10 billion by doubling the size of its business as he eyes off Big W stores, according to Fairfax media reports.
“We know that Big W has lost sales for the last two years and we would really like to take over any of their underperforming boxes and provide consumers with better prices in those areas,” Russo told Fairfax.
Kmart has reached out to every Big W landlords across the 152 store network and Russo said there were about 50 stores he would like to convert to Kmart stores and talk of a private equity bid for the discount department chain has sharpened the focus on the potential of the operation.
Woolworths chairman Gordon Cairns all but ruled out a sale of Big W at the group’s recent annual general meeting, indicating he wanted to see an improvement before making any decision.
Kmart’s full year sales jumped by 8.2% to $4.5 billion in 2014-15, earnings rocketed 18% higher to $432 million, supporting a 32.9% return on capital.
In addition to the conversion of any Big W sites that become available, Kmart has already secured board approval from Wesfarmers for the roll out of more than 50 new stores over the next five years.
In Oxenford, Queensland, Kmart has just opened up next door to Bunnings, trading alongside its sister hardware brand for the first time with record-breaking sales in the opening week.
Kmart trades just downstairs from Ikea in its Richmond shopping centre just south east of the Melbourne CBD, but its homeware sales in this location are rocketing ahead and overall sales at the recently renovated store jumped by 20% last week.