The Perth-based conglomerate will take a pre-tax charge of between $430 million and $480 million on its Kmart Group business, which includes an impairment of the Target brand.
The company says it will convert 10 to 40 Target stores and 52 Country Target stores to Kmart stores.
It will also close 10 to 25 large format stores and 50 small format Target Country stores.
The union representing South Australian retail workers, the SDA, said regional jobs were at risk in the state as a result of the decision.
“Retailers like Target Country are the lifeblood of many regional towns and these workers are some of the most vulnerable in the country,” said SDA state secretary Josh Peak.
“Today’s announcement highlights the urgent need for a comprehensive retail rescue package so that retailers large and small can ensure their long-term success in these uncertain economic times.
“While our retail sector was already under enormous pressure, COVID-19 has decimated consumer confidence and pushed our economy and jobs market to breaking point.”
Wesfarmers will incur $120 million to $170 million in restructuring costs and provisions in Kmart Group.
“The actions announced reflect our continued focus on investing in Kmart, a business with a compelling customer offer and strong competitive advantages, while also improving the viability of Target by addressing some of its structural challenges by simplifying the business model,” Wesfarmers chief executive Rob Scott said.
The conglomerate has also outlined non-cash impairment of $300 million in its Industrial and Safety division following the deterioration in economic conditions since the first-half results.
The restructuring is expected to be implemented over the next twelve months with the majority occurring in calendar year 2021.
It said staff in Target stores being converted would be employed by Kmart, while those in stores being shut would be considered for new roles across the wider group, including in Bunnings and Officeworks.
The group is continuing its assessment of strategic options for a commercially viable Target and its remaining store network.
Wesfarmers also said it will recognise a $290 million gain on its sale of 10 per cent interest in Coles and one-off pre-tax gain of $221 million on revaluation of the remaining Coles investment.
– with AAP
Want to comment?
Send us an email, making it clear which story you’re commenting on and including your full name (required for publication) and phone number (only for verification purposes). Please put “Reader views” in the subject.
We’ll publish the best comments in a regular “Reader Views” post. Your comments can be brief, or we can accept up to 350 words, or thereabouts.
Help our journalists uncover the facts
In times like these InDaily provides valuable, local independent journalism in South Australia. As a news organisation it offers an alternative to The Advertiser, a different voice and a closer look at what is happening in our city and state for free. Any contribution to help fund our work is appreciated. Please click below to donate to InDaily.