Woolworths scraps big W store format

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The Independent Online

Woolworths could take a £41m hit from its decision to axe its big W out-of-town format, the pick 'n' mix retailer revealed yesterday, as it announced plans to press ahead with refurbishing its tired estate.

Woolworths could take a £41m hit from its decision to axe its big W out-of-town format, the pick 'n' mix retailer revealed yesterday, as it announced plans to press ahead with refurbishing its tired estate.

The group confirmed plans to abandon the loss-making big W format that it inherited when it was spun off from Kingfisher two years ago. It plans to scale back its 24 giant sites from the size of "three football pitches to two football pitches" by sub-letting the extra space, Trevor Bish-Jones, the chief executive, said. But he insisted the group was "absolutely committed" to maintaining its out-of-town presence, if not on such a massive scale. If all 24 big W stores are scaled back this year, the group would have to take a £41m exceptional charge to cover the cost of writing down assets, stock and potentially sacking staff, Mr Bish-Jones added.

He has not decided on the exact format to replace big W but intends to re-brand the downsized estate as Woolworths, starting with two trial sites this autumn. The decision to axe the format is bad news for Peacocks, the discount clothing retailer that supplies big W, with analysts estimating it would cost Peacocks £4m in lost profit.

Meanwhile, Woolworths said it would spend £25m this year on rolling out a new, modernised look to 50 more stores. The move will cost the group £5m in lost earnings while the sites are refitted, but an anticipated 10 per cent sales uplift wouldcompensate, Mr Bish-Jones said. He said the new format, dubbed 10/10 internally, would suit 300 out of its 800 stores, "firing the group's growth engine", long switched off.

He said 100 of the company's smallest 500 stores were "near to their lease expiring, or in the wrong location or the wrong size", leaving 400 that he did not know what to do with. Reassuringly, he added that they were all at least profitable.

His comments came as Woolworths announced a 33 per cent rise in pre-tax profit before exceptional items and goodwill amortisation. After these, pre-tax profit was up 76 per cent to £66.7m. The numbers were boosted by a strong performance from its wholesale arm Entertainment UK, which grew third party sales by 27 per cent.

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