Woolworths has finally decided to walk away from its home improvement business Masters.
“We have determined we cannot continue to sustain ongoing losses from this business,” says chairman Gordon Cairns. “We intend to pursue an orderly prospective sale or wind‐up of the business.”
Woolworths shares jumped 6.5% to $24.13 on the news.
Cairns says the decision allows Woolworths to focus its energy and resources on strengthening and executing its plans in its other businesses.
Woolworths, which runs Masters in a joint venture with the US-based Lowe’s Companies, has accumulated losses of about $600 million from its move into home improvement.
In November, Cairns opened the his first annual general meeting with an apology for what he called “poor” profit results and subsequent falls in the company’s share price.
He then said it was clear the Masters business cannot afford to continue losing $200 million a year.
Bunnings, the market leader in home improvement, is a significant contributor to the profits of its owner, Wesfarmers. Bunnings sales jumped a stunning 11.6% in the September quarter to $2.5 billion.
Wesfarmers is buying Homebase, the British home improvement retailer and garden centre, for £340 million ($704 million). The move will eventually see the Bunnings brand across the UK.