Big W drags down profit.
Woolworths’ net profit after tax (NPAT) slumped 157.5% to $1.23 billion in the red, while earnings before interest and tax (EBIT) suffered a 150.2% decline to a $1.69 billion loss. The results are attributed to the costs associated with the new operating model, store network optimisation and property rationalisation, as well as its general merchandise impairment for Big W.
Big W EBIT dropped significantly to a $14.9 million loss from $111.7 million in FY15, while sales saw a 2.8% drop.
Big W has refreshed its executive team, recruiting new buying, design and online leadership. It has reviewed all stores and detailed plans to improve loss-making stores as it tests refurbishment ideas across several locations. Stores will be de-cluttered to improve navigation and visual merchandising will undergo a refresh.
The retailer has identified brands and range tail to be consolidated or refreshed and integrated sourcing and design teams, as well as reduced local agents. The product range will be reduced from over 70,000 SKUs and brands will be consolidated to below 40.
It has removed all marketing agencies to ensure a consistent brand experience and doubled its social media engagement, with more room for improvement.
Big W catalogues have been refreshed and frequency has been reduced whilst shifting marketing mix to digital with plans to increase its email database and online sales.