Target to close dozens of stores
WESFARMERS is scaling back its struggling Target business, confirming it will cut the size or number of stores in the chain to achieve a 20 per cent overall reduction.
While not singling out specific stores, apart from Highpoint in suburban Melbourne which will be downsized, Wesfarmers department stores chief executive Guy Russo said the reduction would occur over the next five years.
He said staff at closing Target stores could be moved to one of Wesfarmers' other brands, such as Kmart or Officeworks, but acknowledged this was not always possible in regional towns.
"Where it's a little sadder is when it's in the country town and there is no other retailer," he told investors in Sydney.
In contrast, Wesfarmers plans to open between eight and 10 new Kmart stores in Australia and New Zealand annually, and explore opportunities abroad.
Kmart managing director Ian Bailey said the brand was keen to sell in overseas markets, adding that a small-scale test and learn approach was the way forward.
"We do all this work to design and make products for Australia and New Zealand and then we pitch them against the world class retailers who are offering their products all over the world," he said.
"So if you look at the numbers, why wouldn't you, you'd be almost crazy not to.
"How big is the prize? Well the world is enormous."
Mr Bailey said countries such as Thailand and Indonesia were markets experiencing a huge expansion in the middle class seeking more aspirational products.
At a Wesfarmers strategy day held this afternoon, bosses also vowed to focus on delivering returns to shareholders after the company's disastrous foray into the UK hardware market.
The retail giant announced last month it will exit the UK after burning through almost $1.5 billion in two years on hardware chain Homebase, which it bought for $705 million in 2016 to convert into Bunnings stores.
Wesfarmers new managing director, Rob Scott, who took on the role last November, said the company would focus on organic growth rather than acquiring new businesses.
Meanwhile, the Herald Sun reported that today's meeting also revealed a surprising new strategy for Coles supermarkets.
Coles boss John Durkan told attendees the grocery chain wanted 40 per cent of all products sold in stores to belong to the brand's own label by 2023.
But Mr Durkan insisted the bold move wouldn't limit customers' choice.
"The last thing we need to do is push stuff onto consumers that they don't want," he said.
"We need to make sure we have the right products with the right quality and right price … we are never going to take away choice."
He said the percentage of Coles-branded products sold currently was in the "high twenties" overall, and more than 50 per cent in "fresh categories" including meat.