No support from investors in yesterday’s big sell off on the news that Woolworths (WOW) and its home improvement partner, Lowe’s Companies, have injected another $90 million into their struggling Masters hardware joint venture.
The shares of the countries biggest retailers hit a 52 week low in trading yesterday of $24.71 and closed 2.2% lower at $24.76.
It is the fourth capital injection this year – taking their total investment over the last six years to a daunting $3.22 billion.
It also signals that the Woolies board is ignoring calls from analysts to wind back Masters or sell it off to better focus the board and management on the weakening performance of the core supermarkets and liquor operations in Australia.
WOW 1Y – Woolworths presses on with Masters
Media reports yesterday said that according to documents lodged with ASIC, the Hydrox Holdings joint venture issued 90 million new shares at $1 each – 60 million to Woolworths and 30 million to Lowe’s – on August 28.
That was same day that Woolworths revealed that a weak performance by its supermarkets and liquor business in Australia, the retirement of chairman, Ralph Waters and losses from home improvement surged 33% to $224.7 million in 2014-155 from the year-earlier $169 million.
Woolies 2014-15 results revealed that losses at Masters jumped from $176 million to $245.6 million on sales of $930 million, while profits at Home Timber and Hardware rebounded 200% to $20.9 million, thanks to some recent acquisitions.
The joint venture has now lost $604 million over the last four years. Masters is reformating some of its stores to concentrate them more on certain sectors and products, such as kitchens and bathrooms.
