Woolworths cuts 500 jobs, closes dozens of outlets in $1B restructure

Is Woolworths losing the price war with Coles? The Australian supermarket giant announced on Monday that it would cut 500 jobs and shutter dozens of underperforming outlets in Australia and New Zealand.

The changes are part of a new almost $1-billion restructuring programme which would also introduce a new operating model with long-term performance measurements such as sales per square metre and return on funds employed, discloses new Woolworths Chief Executive Brad Banducci who started in February. He says the announcement shows the progress the supermarket is making and its commitment to act swiftly to rebuild business.

With the restructuring, the 500 jobs would be cut permanently from the support office and supply chain, while another 1,000 employees would be moved directly into Woolworths businesses to improve accountability and help improve support for store teams and customers, reports Sydney Morning Herald.

Besides the $1 billion restructuring, there is another over $4 billion restructuring in 2016 which would wipe out operating profits, reports the Australian Financial Review. It resulted in earnings before interest and tax before one-off costs going down by up to 32 percent in 2016, between $2.55 billion and $2.57 billion, the result of provisions and write-downs announced in February.

The write-downs and charges could result in another credit rating downgrade for the supermarket giant and force Woolworths to raise underwrite its dividend investment programme. But Banducci says Wooworths has no current plans to raise capital.

Woolworths would shutter 27 underperforming stores, 21 in Australia and six in New Zealand. The company would also close three hotels. These stores would also be closed prior to the end of their lease term. But Woolworths would not shutter its Big W stores. The company adds it would be slower in opening roll out stores since it would only roll out 45 in the next three years rather than the planned 90.

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" Source: http://www.commsec.com.au