Wesfarmers Announces It Will Close or Spin-off 167 Target Stores
Retail group Wesfarmers has announced its move to close the doors of 75 Target department stores, adding that it will convert an additional 92 stores into Kmart stores amid a massive restructuring plan.
Wesfarmers broke the news via a press release - which you can access here - stating that the company has made its move to “accelerate the growth of Kmart and address the unsustainable financial performance of Target.”
The company also announced it would have up to $1.3 billion worth of costs and write-downs this year, as it closes a number of Target stores, which is predicted to cost Wesfarmers anywhere between $120-170 million, with an additional $140 million allocated for conversions and stock clearances.
As many as 400 Target jobs could be lost as a result of the restructuring plan, however, Wesfarmers has said that it will attempt to redeploy any staff made redundant by the change to either a position at Kmart, Bunnings or Officeworks. The company will also offer redundancy packages to any staff that can’t, or choose not to be moved to another position in its portfolio.
“These actions include the conversion of 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,” according to the release.
Rob Scott, Wesfarmers’ Managing Director has said that the move is aimed at enhancing the overall position of the Kmart group and improving the commercial viability of the remaining Target network.
“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,” he said.
Scott also mentioned that Wesfarmers will further invest in digital sales, stating that “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.”
“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.”
“It’s not a decision we’ve made lightly and if we could find an economic way to service those communities, we would have done so,” Scott concluded.
The decision has left the government’s Agriculture Minister, David Littleproud fuming, saying the move will leave a number of regional areas without access to a department store. “If they want to turn their back on the most vulnerable, it just goes to show that corporate Australia has lost its way, morally.”
“I think Australians should vote with their wallets and not go near them,” he added, adding that the company doesn’t “give a rat’s about us.”
Ian Bailey, Managing Director of the Kmart group said that Target still “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.”