Woolies builds $1.1b land bank for hardware
The retailer, which has launched an attack on the dominance of hardware heavyweight Bunnings, has also amassed a sizeable freehold property portfolio, buying independent hardware businesses to swell the ranks of its home-improvement offering.
Documents obtained by BusinessDay show the Masters joint venture is still running up sizeable losses, with the sprawling hardware operation posting a full-year loss before interest and tax of $138.86 million in fiscal year 2013.
Following an income tax benefit, the Masters business, which includes Danks hardware distribution and the operation of banner groups Home Timber & Hardware, Thrifty Link and Plants Plus, made a full-year loss of $98.14 million. Total revenue rose to $1.24 billion from $828.3 million.
Woolworths owns 66.66 per cent of Masters and is estimated to have invested $2 billion in capital since it began the partnership three years ago. The joint venture is forecast by Woolworths boss Grant O'Brien to break even in 2015-16.
Woolworths and Lowe's have amassed a large amount of land for its rollout program that will see the number of Masters stores rise from 31 at present to around 150 in the next few years.
Financial documents lodged by Woolworths and Lowe's with ASIC show it was sitting on development properties worth $502.2 million as at June 30 as well as freehold land, warehouses, retail and other sites worth an extra $594.86 million.
In 2012-13 it spent $21 million on acquiring the Hardings Hardware business, adding to its ranks three stores in Victoria, two in Queensland and one in South Australia.
This gives the Masters joint venture a land bank and property portfolio worth nearly $1.1 billion, up sharply from its total property book in 2012 valued at $850 million.
Masters doubled the number of stores it opened in fiscal year 2013.
The property portfolio is in part driven by the failure of developers since the global financial crisis, as well as the unwillingness of banks to lend to those that survived, which forced Woolworths and its rival Bunnings to locate, buy and develop some of their own sites.
Bunnings has plans to invest $1.5 billion building as many as 78 new stores over the next three years to defend its dominant position.
Masters has plenty of firepower to drive its growth plans. At the end of fiscal year 2013 Woolworths' hardware retail and distribution operation was sitting on assets of $2.18 billion, up from $1.66 billion, and almost no debt.
Woolworths' wages bill spiked as more staff were needed, with hardware staff numbers rising by nearly 1000 last financial year to 5813, an increase of 20 per cent.
Frequently Asked Questions about this Article…
Woolworths, in partnership with Lowe's, is expanding its Masters hardware stores by building a land bank worth nearly $1.1 billion. This strategy involves acquiring and developing properties to increase the number of stores from 31 to around 150 in the coming years.
Woolworths, in partnership with Lowe's, is expanding its Masters hardware stores by building a land bank worth nearly $1.1 billion. They plan to increase the number of stores from 31 to around 150 in the coming years.
Woolworths has invested approximately $2 billion in capital into the Masters joint venture since its inception three years ago, owning 66.66% of the venture.
Woolworths has invested approximately $2 billion in capital into the Masters joint venture since it began three years ago, owning 66.66% of the venture.
The Masters joint venture has faced financial challenges, posting a full-year loss before interest and tax of $138.86 million in fiscal year 2013. Despite an income tax benefit, the full-year loss was $98.14 million.
The Masters joint venture has faced significant financial challenges, posting a full-year loss before interest and tax of $138.86 million in fiscal year 2013, despite a rise in total revenue to $1.24 billion.
The Masters joint venture saw its total revenue rise to $1.24 billion from $828.3 million, indicating growth despite the financial losses.
Woolworths' CEO, Grant O'Brien, forecasts that the Masters joint venture will break even in the 2015-16 fiscal year.
Woolworths' CEO, Grant O'Brien, forecasts that the Masters joint venture will break even in the 2015-16 fiscal year, suggesting optimism for future profitability.
The global financial crisis led to a failure of developers and an unwillingness of banks to lend, prompting Woolworths to locate, buy, and develop its own sites for the Masters stores.
The Masters joint venture is challenging Bunnings' dominance in the hardware sector. Bunnings plans to invest $1.5 billion to build up to 78 new stores over the next three years to maintain its leading position.
The Masters joint venture's property portfolio is valued at nearly $1.1 billion, a significant increase from its 2012 valuation of $850 million.
Property acquisition is crucial for Woolworths' expansion, as the company has amassed a large land bank and property portfolio worth nearly $1.1 billion, driven by the need to develop its own sites due to the global financial crisis and banks' reluctance to lend.
With the expansion of Masters stores, Woolworths' hardware staff numbers increased by nearly 1,000 last financial year, bringing the total to 5,813 employees, a 20% increase.
The expansion of the Masters joint venture has led to a significant increase in Woolworths' workforce, with hardware staff numbers rising by nearly 1,000 to 5,813, a 20% increase over the last financial year.
Bunnings plans to invest $1.5 billion to build up to 78 new stores over the next three years to defend its dominant position in the hardware market.
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