Analysts adjust profit forecasts.
Big W is expected to fall into the red or barely break even as the weaker Australian dollar negatively impacts weak margins. Analysts have adjusted their full-year profit forecasts for Big W after it reported a 39% plunge in profit to $67.3 million.
Credit Suisse believes Big W could earn $62 million this year – implying a second-half loss of $5.3 million – and fears earnings could plunge to $47 million next year.
UBS expects Big W to make just $5 million in the June half, taking full-year earnings to $72 million compared with $114 million in 2015 and $178 million in 2012. Earnings are expected to improve modestly in 2017 and 2018.
UBS analyst Ben Gilbert commented on recently appointed CEO, Sally Macdonald’s (pictured) “big job ahead.”
“In the context of a new streamlined structure at Wesfarmers (which is merging the Target and Kmart operations) and improved execution at Myer and David Jones and new fast fashion entrants,” Gilbert said.
Following the release of Woolworths first-half results last week, Macdonald said Big W needed to cut costs and rejuvenate the brand while maintaining its value proposition and simplifying the business.
“The Big W business today is unnecessarily complex and I am determined to ensure the whole team is focused on the right things to drive future profitability and ensure a great in-store experience for customers in the future,” she said.