Restructuring Woolworths Group Plc. - The Attempt that Failed

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Case Details:

Case Code : BSTR323
Case Length : 19 Pages
Period : 2001-2008
Pub Date : 2009
Teaching Note :Not Available
Organization : Woolworths Group Plc.
Industry : Retail
Countries : UK

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

Its debt obligations stood at 342.5 billion as on August 02, 2008 (Refer to Exhibit I for financial highlights of Woolworths Group Plc between 2001 and 2008, to Exhibit II for interim financial results for the 26 weeks ended August 02, 2008, and to Exhibit III for the Group's net debt obligations as on February 02, 2008, and August 02, 2008)4.

It had rejected offers from a number of buyers including Iceland Foods5 in August 2008 while its bankers rejected a take-over by Hilco UK Limited.

After going into administration, Woolworths failed to achieve a turnaround in December 2008 in its peak sales season. On December 27, 2008, the first set of 200 Woolies stores were closed down with the rest scheduled to close by January 06, 2009.

In the process, 25,000 workers from Woolies and another 5000 from the EUK lost their jobs. Woolworths had started its independent operations as a retail and entertainment company in 2001. When it demerged from its parent concern, the Kingfisher Group Plc6, in August 2001, it inherited a debt of 200 million and costly lease agreements and stock positions...

Excerpts >>

4] Interim Report 2008, Woolworths Group Plc.
5] Iceland Foods Limited is a UK-based private retailing company dealing in meats, seafood, and other frozen foods with business interests in the sale of appliances with 660 stores across the UK as of 2009.
6] Kingfisher Plc was an international retailer founded with the buyout of the Woolworths British chain by Paternoster Stores Limited in 1982. The group was subsequently renamed Kingfisher in 1989. During its history, Kingfisher Plc undertook a number of acquisitions to grow inorganically until price pressures on the stock market forced it to demerge a number of its businesses since 2001 including Woolworths and Kesa Electricals, in order to continue as a focused DIY business. It operated 780 stores in nine European and Asian countries as of 2008. The company reported sales of 8676 million and net income of 338 million in the fiscal 2007.

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