Wednesday 11 February 2009

UK Woolies goes online -- but at what cost?

According to The Guardian (here), the troubled Woolworths retail brand in the United Kingdom is to be resurrected as an online store by Sir David and Sir Frederick Barclay, who specialise in buying up home delivery retail groups (the brothers' Shop Direct mail order and online retailing empire already contains Littlewoods, Kays, Marshall Ward and Great Universal) and they have presided over an increase in web sales from 18% to 56% in the past three years.

Right: assets might be fit to fleece, but how much is the Wool Worth ...?

The store group fell into administration in November with the loss of 30,000 jobs, few if any of which are expected to be saved by the deal. Neither Shop Direct nor Woolworths administrators from Deloitte would comment on the price paid. IP Finance would be surprised if the figure was high, given (i) the current economic situation, (ii) keen price competition in traditional Woolworths sectors, (iii) the lack of potential for growth outside the UK, where the Woolworths brand is alive, kicking and owned by others, and (iv) the appearance that a large proportion of loyal Woolworth shoppers were from low-income groups that were less enthusiastic about online shopping.

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