Woolworths Limited has revealed a net loss of $217 million from its divestment and restructure of the failing Dick Smith electronics brand.
The company this morning reported the consumer electronics business contributed to a 16.8 percent company-wide drop in net profit for the first half of 2012 to just under $1 billion.
Woolworths in January announced it would close 100 of 386 underperforming Dick Smith stores across Australia and New Zealand over the next two years through a staged restructure.
Net profit from the chain fell 2.1 percent to $13.8 million for the 27 week period.
Dick Smith sales increased by just under 1 percent but earnings before tax were impacted by price deflation in the category, dropping 2.5 percent to $19.5 million for the period ending December 2011.
Woolworths’ decision to shift its consumer electronics focus to Big W didn’t manage to prop up that chain’s profitability, with the brand suffering a 1.3 percent decrease in sales to $2.4 billion despite an increase in units shipped. This was in part due to price deflation in the Home Entertainment category, which averaged around 5 percent for the period.
Woolworths will open three Big W outlets in the second half of 2012, adding to the four opened last half. It plans to introduce 35 more stores over the next five years.
A November 2011 review into the Dick Smith business found investment in the brand was disproportionate to its profitability. Woolworths said several parties had expressed interest in acquiring the chain since the January sell-off announcement.
Woolworths shares were up $0.14 to $25.45 by late morning trade. Its overall net profit after tax excluding the discontinued Dick Smith operation increased just over 3 percent to $1.1 billion.
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