Woolworths closes the door on Masters

InDaily has contacted Woolworths for further comment on job losses and the future of South Australia’s four Masters stores. The question now is, could another competitor open up to compete against Bunnings because Masters under the Woolworths stewardship was not expertly managed?

Masters has been an enormous capital drain and management distraction for a company that needs to focus on fixing its core supermarkets business and restoring shareholder value.

In contrast to the ailing Masters brand, Wesfarmers is looking to roll out its Bunnings home improvement chain in the United Kingdom within the next five years.

‘We have determined we can not continue to sustain ongoing losses from this business, ‘ he said in a statement on Monday.

“Lowe’s has given us notice of its election to be able to exercise its put option under the joint venture agreement”.

In an announcement to the sharemarket this morning, Woolworths chairman Gordon Cairns said his company had made a decision to purchase all of Lowe’s shares in Hydrox Holdings, the company behind Masters Home Improvement.

“As a result, Woolworths intends to exercise its call option to acquire the 33.3% stake held in by Lowe’s, which will allow us to control the exit process”, the release said.

“Woolworths were hoping to mop that up out of the Masters experiment. This enables full ownership of the business by Woolworths in a shorter timeframe and give us access to the widest range of exit options”.

While Home Timber & Hardware is profitable, earning about $20 million in 2015, the Masters business is considered by many analysts and fund managers to be unsaleable as a going concern in its current form and may have to be liquidated.

But entering the market has proved hard for Masters, which has struggled to secure appropriate sites for its proposed warehouses and failed to make a dent in the ubiquity and dominance of Bunnings.

Mr Cairns said it would take at least two months to complete the valuation process and indicated it could take many more months to wind up or sell the businesses.