Tainted: Woolworths is axing the Countdown brand. Photo / Alex Cairns
Tainted: Woolworths is axing the Countdown brand. Photo / Alex Cairns
Woolworths is slashing the value of its New Zealand supermarkets by $1.6 billion to $700 million, blaming a “weaker medium-term outlook”, higher interest rates and a lag time for new initiatives to bear fruit, Businessdesk reports.
The non-cash impairment follows the first review of the goodwill on theparent company’s balance sheet since Woolworths bought the supermarkets owned by Progressive Enterprises in 2005.
With the New Zealand assets currently carried in Woolworths books at $2.3b, the writedown amounts to a 69.56 per cent reduction in value.
In a statement to the ASX, Woolworths said it was also expecting a 42 per cent decline in earnings before interest and tax (ebit) to $71m in the first half of the current financial year.
Of this, only $13m was attributable to the direct costs of eliminating the Countdown brand, which was judged to have become tainted by allegations of supermarket profiteering, and returning to the Woolworths brand in New Zealand.
