News just in:
Retail giant Woolworths has announced it will exit its unprofitable Masters hardware business through selling it or by winding it up.
Woolworths will buy out its one-third joint-venture partner, US hardware firm Lowe’s, so that it has full ownership of Masters.
Lowe’s had decided to use an option it had to sell its stake in the business to Woolworths.
Woolworths will exercise its option to buy out Lowe’s but then try and sell Masters, or simply shut it down over time if a purchaser cannot be found.
At the same time, rival Wesfarmers is expanding its hardware business by confirming the purchase of UK retailer Homebase for 340 million pounds, or around $705 million.
Wesfarmers confirmed last week that it had made an offer for Homebase, the UK’s second-largest hardware chain.
Sharemarket likes the news, while the broader ASX200 is down 1.7% at the open following the awful US lead, Woolworths (WOW) shares are up 3% on the divestment prospects.
Is this a sign of a top in building construction or housing DIY consumption? Probably neither given Bunnings is performing so well, although its expansion into the UK may be the same mistake made by Woolworths here – corporate mismanagement.