UPDATED May 23: Following yesterday’s announcement of a major shake-up among Wesfarmers retail brands, Target has announced which stores will close and which will change to Kmarts. In the ACT, Weston Creek will close in early-mid 2021. There’s no indication about the other Canberra Target stores.
In the South East, the Cooma, Cootamundra, Merimbula, Nowra and Wagga stores will all close in early to mid-2021 among other regional stores across NSW.
Target stores being converted into Kmart in the South East include Bega, Tumut, Ulladulla and Yass, from early to mid 2021.
May 22: The network of Target stores that services many communities in the ACT and South East NSW will undergo major changes, including multiple closures, Target’s parent company Wesfarmers announced to the ASX today.
Wesfarmers notified the markets of restructuring costs and provisions totalling approximately $120 to $170 million before tax, primarily reflecting Target store closure costs, inventory write-offs and a restructure of the Target store support back office.
In a statement, the company said they had been forced to “address the unsustainable financial performance of Target”.
Practically speaking, as many as 1,300 of the existing 13,000 staff could lose their jobs as Target stores close or are converted into Kmarts. The Target brand will remain intact and some stores will stay open but Wesfarmers intends to convert many of them into Kmarts with a different retail profile.
There are a number of Target stores in the ACT including at the Canberra Centre, Belconnen, Tuggeranong and Weston Creek. There are also target stores in Yass, Goulburn, Cootamundra, Merimbula and Tumut. Wesfarmers says that all rural Target Country stores will either convert to small format Kmart stores or close.
It’s not clear what their intentions are for city Target shopfronts and the closure locations have not been made public yet.
The move has been greeted with widespread criticism, including calls for boycotts.
Federal Agriculture Minister David Littleproud said that companies like Wesfarmers had “lost their moral compass” in making major changes that would significantly affect regional communities.
“They make billions out of Australians and are turning their back on the most vulnerable … they don’t give a rat’s about us,” he said today. “If you’re not going to support one another, then don’t support them.”
The company also intends to shift focus from shopfronts to online and while COVID-19 is likely to have been a catalyst for exiting commercial leases and job cuts of around 10 per cent, financial analysts say that concerns about the chain were well established before coronavirus reared its head.
“Following the completion of the first phase of the Target review, Kmart Group has identified a number of actions to accelerate the growth of Kmart,” the stock market statement said.
Chief executive Rob Scott said today that Target workers would be offered redeployment to Kmart, Bunnings and Officeworks, which are also owned by Wesfarmers.
“For some time now, the retail sector has seen significant structural change and disruption, and we expect this trend to continue. With the exception of Target, Wesfarmers’ retail businesses are well-positioned to respond to the changes in consumer behaviour and competition associated with this disruption,” he said.
“The actions announced reflect our continued focus on investing in Kmart, a business with a compelling customer offer and strong competitive advantages, while also improving the viability of Target by addressing some of its structural challenges by simplifying the business model.”
The company began in Geelong in 1926 as a drapery. Target stores across regional Australia are often the only general retail stores in country towns. The closures will take place over the next 12 months.