Woolworths has now lost nearly R12 billion in 5 years trying to go big in Australia
- Woolworths has readjusted the value on its books of Australian retailer David Jones – taking another big hit.
- Since 2014 Woolworths has now lost not much under R12 billion on its quest to become a "top 10 global department store operator".
- This time though, its board says, it has the value pegged down.
- For more stories go to www.businessinsider.co.za.
In 2014 Woolworths told its investors that – for a price at the time equivalent to R21.4 billion – it would "create a leading southern hemisphere retailer" and "become one of the top 10 global department store operators" by buying iconic Australian brand David Jones.
On Thursday the South African company said it had written down the value of David Jones – again – because of "economic headwinds and the accelerating structural changes affecting the Australian retail sector as well as the performance of the business, which has fallen short of expectations".
At current exchange rates that means Woolworths has now recorded on its books a loss of a little under R12 billion – or well over half its initial huge investment.
See also: Woolworths just appointed Marks & Spencer's former fashion boss to its board - what to expect from the UK's 'queen of retail'
In a trading statement ahead of its annual results expected later this month, Woolworths said its board is satisfied that the new valuation is realistic and "reflective of its prospects".
Woolworths paid a premium of more than 25% for David Jones five years ago in a deal that was enthusiastically accepted by the target's board. At the time Woolworths said it had already identified initiatives that would "deliver synergies of at least R1.4 billion" per year within five years.
Instead the losses racked up because of write-downs in David Jones saw Woolworths report its first losses in well over a decade, even though it continued to trade profitably in South Africa.
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