JOHANNESBURG – The Spotlight is now on the management of Woolworths after the retailer wrote down the value of its troubled Australian David Jones department store for the second time since last year, despite assurances this year that it would not occur.
Woolies, the JSE-listed fashion and beauty retailer, said David Jones had impaired A$437.4 million (R4.35 billion) in the year to June resulting in the valuation falling to A$965m.
Woolies said on Thursday that a strategic review of the David Jones portfolio had also identified stores with onerous leases resulting in an additional provision of A$22.4m at period end.
“The impairment reflects the economic headwinds and the accelerating structural changes affecting the Australian retail sector as well as the performance of the business, which has fallen short of expectations. The WHL board believes that the valuation of David Jones is realistic and reflective of its prospects,” the group said. Woolies said as a result of the impairment, headline earnings a share would take a hit in the year ended June.
David Jones has underperformed due to the weak economic sentiment in a tough Australian market that has been worsened by online players such as Amazon.