Blame the at times hysterical media reporting and stockbroking analyst reports about the weak stock market, the advance of Amazon upon our shores, and/or the fickleness of local consumers but there won’t be an Officeworks float happening any time soon, or a trade sale.
Wesfarmers announced yesterday that it had shelved plans to spin off Officeworks into a separately listed company.
Wesfarmers said in February it wanted to either float the office supplies chain, or sell it in a trade sale.
The conglomerate – which also owns supermarket giant Coles, home improvement chain Bunnings and discount retailers Kmart and Target – said that following a strategic review it had determined an IPO of Officeworks would not raise enough money because of current poor sharemarket conditions.
The IPO would therefore not be in the best interests of its shareholders, Wesfarmers said told the ASX in a statement yesterday morning.
In its statement Wesfarmers didn’t rule out selling Officeworks in a trade sale with about to retire CEO, Richard Goyder saying the company was comfortable holding onto the business and would only sell it “if it was considered to be in the best interests of Wesfarmers’ shareholders”.
But clearly if a float couldn’t deliver a price good enough for Wesfarmers, a trade sale wouldn’t come near it.
And while the market conditions are weak, that’s in the retailing sector where the arrival of Amazon this year is being blamed for weak sales growth, falling profits, indifferent consumers and weak retail sales overall.
But the reality is that retailing is weak because of weak jobs growth, low wage growth and the gloomy outlook for more jobs.
Yesterday’s weak wages data for the March quarter and the first 9 months of the year tells us there will no no lift for consumers from that quarter this year.
Wesfarmers shares fell 1.3% to $43.36.
