Wesfarmers managing director Richard Goyder was clearly subdued when announcing writedowns of up to $1.3 billion in the value of the struggling Target retail chain.
“I wouldn’t rate this as one of my better days in the group,” Goyder told a media briefing.
“I’m not doing cartwheels.”
Wesfarmers, Australia’s biggest private employer, today announced impairments and restructuring costs totalling $2.3 billion for Target and for the coal business.
The move prompted UBS to cut its Wesfarmers earnings per share target to $2.01 from $2.08, reflecting the impact of a now forecast $50 million EBIT (underlying earnings before interest and tax) loss by Target for the full 2016 financial year.
Wesfarmers will also spend $145 million on restructuring costs at Target.
The new head of the a department stores division, Guy Russo, is working on cutting costs, including shedding jobs.
Profits at Target have dropped 75% over the past five years. In the latest quarterly report, Target sales were up 2.3% to $678 million, with comparable store sales up 1.4%.
Target came to Wesfarmers in 2007 when it bought Coles and Officeworks for $22 billion.