Cape Town – Woolworths advised shareholders in a trade update on Wednesday that the re-assessment of the carrying value of the David Jones assets has been completed and a non-cash impairment charge of A$712.5m will be recognised.
The group said this reflects the cyclical downturn and structural changes that have impacted performance across the Australian retail sector.
A Woolworths Holdings spokesperson told Fin24 that Wednesday’s write-down reflects tough and unprecedented trading conditions, a cyclical downturn and structural changes that have impacted performance across the Australian retail sector.
In addition this impairment has been exacerbated by delays and poor execution in certain of its key initiatives at David Jones.
“These conditions have not altered our focus on the transformation of David Jones and we are committed to the resolution of these execution issues and our ongoing investment plans for the business,” the spokesperson said.
“We have recently implemented new merchandising and customer relationship systems, and will continue to make significant investments in both our online and in-store offerings, including the renovation of the Elizabeth Street Flagship store and the growing David Jones food business. These initiatives will prepare our business for the retail landscape of the future while building on the great heritage of our brand.”
Earlier in January, Woolworths advised shareholders that earnings per share (EPS) for the 26-weeks ended December 24 2017 are expected to be more than 20% (69.0 cents) lower than the 345.1 cents reported for the 26-week period ended December 25 2016.
“The board remains committed to the transformation of David Jones, the resolution of executional issues and will continue to invest in the business,” Woolworths said.
After considering the re-assessment of the carrying value of the David Jones assets and the impact of the A$172.6m profit on disposal of the David Jones Market Street property in the prior period, EPS growth for the 26-week period ended December 24 2017 is now expected to be within the range as set out below:
By end of trade on Wednesday Woolworths’ share price was down 1.99% at R65.67.
* Sign up to Fin24’s top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER
24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.