Australia's Woolworths to sell its electronics unit amid decreased electronics sales, will focus on its 'core' divisions, including groceries

Cindy Allen

LOS ANGELES , January 31, 2012 (Industry Intelligence) – In the wake of decreased electronics sales, Woolworths Ltd. has announced that it plans to sell its Dick Smith electronics unit, Bloomberg reported Jan. 31.

According to a statement released on Jan. 31, Woolworth’s Big W discount outlets will begin selling electronics and accept an AU$300 million ($318 million) restructuring charge concerning the sale of its Dick Smith electronics unit.

“Commonsense has prevailed and Dick Smith will be divested,” said Morningstar Inc. analyst Peter Warnes, “For many a year we have described Dick Smith as a distraction and called for the operation to be divested and consumer electronics to be integrated into Big W.”

Dick Smith accounted for less than 4% of Woolworths’ total revenue, allowing the chain to withstand the slower discretionary spending that led to a reduction in forecasts for other electronics retailers.

Woolworths said, “The investment and management attention given to Dick Smith have been disproportionate relative to its position within the Woolworths group. The company’s current focus is on accelerating growth in its core trading divisions.”

On Jan. 31, Woolworths also released its second-quarter sales. During this period, revenue increased 5.1% to AU$15.1 billion, in line with the average estimate provided by four analysts surveyed by Bloomberg.

Sales of food and liquor at Woolworth’s Australian supermarkets increased 4.1% to AU$9.9 billion while same-store sales at stores that had been open for one year or longer increased 1.1%, less than the 1.6% average estimate forecast by the four analysts.

During this period, sales at Big W decreased 0.1% to AU$1.3 billion, while sales at the consumer electronics unit increased 3% percent to AU$581 million.

The primary source of this article is Bloomberg, New York, New York, on Jan. 31, 2012.

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