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Woolworths getting rid of EziBuy

NZ NewswireNZ Newswire 24/07/2016 Paul McBeth

Australian supermarket chain Woolworths has written off $A309 million ($NZ329.6m) from the value of its New Zealand clothing and homeware retailer EziBuy and wants to sell the business.

Woolworths bought EziBuy for $NZ350m in August 2013 from founders Peter and Gerard Gillespie and Australian private equity firm Catalyst Investment Managers, with a view to learning from the New Zealand firm's success in selling through different channels.

The Sydney-based company on Monday said it had split EziBuy from its Big W business because expected synergies between these two businesses had not been realised and "in many cases, have resulted in dis-synergies for both businesses".

EziBuy is expected to post an annual loss of between $A13m and $A18m before significant items when Woolworths reports its results on August 25.

The separation and poor trading performance prompted the impairment charges on goodwill and other intangible assets.

Woolworths will look at selling EziBuy, chief executive Brad Banducci says.

"The team have been working hard on a plan to transform EziBuy and that work continues."

The changes are part of a wider move at Woolworths to lift profitability, with 500 jobs to be cut from the company's support office and supply chain and a further 1000 to be moved from group office into the businesses.

Woolworths will face $A959m of restructuring costs in the 2016 financial year, including the EziBuy impairment, closing down underperforming supermarkets and scaling back new stores.

The company closed three stores, including one New Zealand Countdown supermarket, in 2016 and plans to close 30 stores across its portfolio, of which six are Countdown supermarkets.

Three more Countdowns have been marked as underperforming, out of the 34 stores whose future remains uncertain.

The retailer said earnings before interest and tax from continuing operations were between $A2.55 billion and $A2.57b in the 2016 financial year.

The ASX-listed shares last traded at $A22.45 and have dropped 8.4 per cent this year.

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