Hardware still the elephant in the room for Woolworths

 In Australia, NewZealand, Woolworths
When Woolworths releases its full-year results on August 29 the focus won’t be on the fallout of the continuing price war with Coles, the debate over suppliers or petrol discounting but its hardware business, which has become an increasingly bloody battleground.

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Since Woolworths moved into the home improvement market in 2010 to take on the Bunnings juggernaut, which sits in the Wesfarmers empire along with Coles and other Woolworths rivals, it has taken a lot of stick.

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The howls of concern reached fever pitch last year when the supermarket giant revealed its home improvement business suffered losses of $139 million, 71 per cent higher than its budgeted loss of $81 million.  

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This comprised a $157 million loss from its Masters business, compared with a forecast loss of $119 million, and a lower-than-expected profit from its Danks business of $18 million instead of an expected $38 million.

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David Errington at Merrill Lynch has been one of the earliest – and biggest – sceptics of the group’s push into Masters. He predicts it will make a 100 per cent loss of $195 million in 2014, ballooning to $265 million in 2016 – the year the company has promised it will break even. Sydney Morning Herald – Read more…

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