Lowe's chief jets in to reverse Masters losses
Top executives from US hardware company Lowe's, believed to include chairman and chief executive Robert Niblock, have flown to Australia for meetings with its Masters hardware joint-venture partner, Woolworths, as the start-up chain continues to lose millions of dollars and miss earnings targets.
BusinessDay has learnt that a board meeting of the Masters joint venture will be held in Melbourne on Friday, with directors from Lowe's and Woolworths touring several Masters stores in the south-eastern suburbs, including Hawthorn East, where the key meeting will take place.
It is expected Masters director Melinda Smith will present her strategy to the board, which includes Woolworths chief executive Grant O'Brien and chief financial officer Thomas Pockett, where she will flesh out her plans to turn around the struggling hardware chain.
The company is expected to post a pre-tax loss of $157 million for 2012-13 against an original target of a loss of $119 million.
Woolworths and Lowe's hold a two-thirds and one-third stake respectively in the new Australian hardware chain.
The Masters directors include Mr Niblock, who is believed to have flown to Australia for the board meeting, as well as Lowe's executive Gregory Bridgeford and the company's international development and operations director, Douglas Robinson. Woolworths representatives will include director John Astbury and Big W director Julie Coates.
The board meetings are held annually, with Woolworths directors also flying to the US to meet their Lowe's partners.
This week's Masters meeting comes at a critical time for the new venture after it has struggled to reach the sales and earnings targets first set out for it by Woolworths when it launched into the $42 billion hardware sector more than two years ago.
Lowe's has the option to force Woolworths to buy it out, but recently the US hardware group decided to extend the first exercise date of its put option for another 12 months, to October 2014. It is not known if Lowe's was paid any money to extend its option.
Last month, Woolworths was forced to admit Masters was losing more money and at a faster rate than it expected, saying its losses for financial 2013 would blow out to $157 million due to rising costs, shrinking margins and customers leaving stock on the shelves.
It is expected Lowe's and Woolworths will demand a clear strategy from Ms Smith, with speculation growing she could soon be replaced.