Woolworths (WOW) share prices rallies on buyback
Stock
Woolworths (WOW) $34.06 as at 01/04/2019
Event
Woolies shares have rallied today after a delayed start on some mixed news out to the market. The supermarket has successfully sold its petrol business to UK petrol retailer EG Group for $1.7b as was flagged late last year. The petrol business contributed $84m to the groups EBIT in the first half, around 5.5% of Woolworth’s total.
The company has always maintained the proceeds would return to shareholders and today that promise was kept as Woolworths launched an off market buyback. The company stated that a number of options were considered, but specifically noted the ability to release a portion of its large franking credit balance through the off market buyback as key in its decision, particularly ahead of the likely incumbent Labor party’s franking cash rebate attack.
Along with the petrol sale and buyback announcement, Woolworth’s also published the review into its discount department store Big W in which it identified 30 stores for closure over the next three years. Big W has been a thorn in the side of WOW. Big W has recently seen LFL sales do well, adding 6% in the 3rd quarter, however they have struggled to convert that into earnings and the business is expected to post a loss for FY19 of between $80-100m compared to a FY18 loss of $110m.
Woolworths (WOW) Chart
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