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Australia's Woolworths exits consumer electronics business
September 26, 2012 / 11:47 PM / 5 years ago

Australia's Woolworths exits consumer electronics business

SYDNEY, Sept 27 (Reuters) - Australia’s top supermarket chain Woolworths Ltd agreed to sell its Dick Smith Electronics chain in Australia and its Indian wholesale venture for a combined A$55 million ($56.88 million) under a plan to exit the consumer electronics segment.

Woolworths said private equity firm Anchorage Capital Partners will buy the Dick Smith chain for initial cash proceeds of A$20 million, compared with A$200 million expected by analysts last year when the plan was announced as a weak retail environment takes its toll.

Dick Smith chain recorded sales of A$1.57 billion and earnings before interest, tax and one-off charges of A$24.6 million, in financial year 2012, according to a stock exchange filing.

Woolworths will sell Woolworths Wholesale to Infiniti Retail Ltd, a part of Indian salt-to-software conglomerate Tata Group, for A$35 million, it said in a statement.

“These businesses were a small part of Woolworths and this divestment will allow us to be fully focused on the core parts of our business,” chief executive Grant O‘Brien said.

Australian retailers have had a tough year, as frugal consumers spend less and fierce competition from nimble online retailers cuts prices, while a boom in the resource sector failed to provide a major lift to many other parts of the economy.

This is forcing retailers such as Woolworths, which operates supermarkets, department stores, liquor retail stores, hotels and home improvement stores, to focus on measures to protect margins and exit non-core businesses.

Woolworth said Anchorage will buy 325 stores employing 4,500 people and Woolworths said its restructuring provision of A$420 million in taken in 2011/2012 will not change.($1 = 0.9669 Australian dollars) (Reporting by Narayanan Somasundaram; Editing by Eric Meijer)

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