Masters Home Improvement

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Masters Home Improvement
Subsidiary
Industry Retail, Home Improvement
Founded September 1, 2011 (2011-09-01)
Defunct 11 December 2016 (2016-12-11)[1]
Number of locations

63 (before its closure)

0 (after its closure)
Area served
Australia
Key people
Grant O'Brien (Woolworths Limited CEO), Matt Tyson (Managing Director, Home Improvement), Melinda Smith (Director, Masters)
Revenue IncreaseA$1.1 billion (2016)[2]
DecreaseA$ -234 million (2016)[2]
Parent Woolworths Limited
Website www.masters.com.au

Masters Home Improvement was the trading name of an Australian home improvement chain operated by retailer Woolworths Limited.[3] between September 2011 and December 2016. Masters was created as a way for Woolworths Limited to enter the hardware retail space, which has been historically dominated by Bunnings Warehouse, owned by rival Wesfarmers. The two companies also compete with each other with groceries, liquor, fuel and general merchandise.

The venture was ultimately a failure for Woolworths Limited, accumulating losses of over A$3.2 billion over a 7 year period, and caused Woolworths to exit the hardware industry with all stores being closed and sold off in December 2016.

History[edit]

Woolworths announced its plan to enter the Australian hardware sector via a joint venture with U.S. based hardware chain, Lowe's on 25 August 2009.[4]

The original plan was to develop in excess of 150 stores within a 5 year period.

The Masters brand name was announced on 2 May 2011,[5] coinciding with the launch of a website at masters.com.au.[6] Hans Hulsbosch, who has designed brand identities for Woolworths and Qantas designed the Masters brand and logo.[7] At that time, there were 14 stores under contstruction, with building approval for an additional 10.

The first outlet, located in Braybrook, Victoria, opened to tradesmen on 31 August 2011, and the general public on 1 September 2011.[5] In the Sydney Morning Herald, CEO Don Stallings is attributed as saying that staff will be trained for at least 100 hours, and the stores will offer over 35,000 products.[8] Ways in which Masters will differentiate from its competitors include stores which are more brightly lit, more colourful with polished concrete, large colour signage and store displays, it aims to place more emphasis on attracting female shoppers. Buzzers scattered around the store, which, when pressed, will send a nearby staff member to that location to help out a customer, pagers handed to customers which enables them to continue shopping while their paint is tinted, selling more 'non hardware' lines such as whitegoods as well as having McDonald's restaurants and McCafés in selected stores. In June 2012 Masters launched their transactional website that offers more than 30,000 products nationwide. This gave Masters Home Improvement the title of Australia's first online hardware and home improvement retailer.

The first store in Queensland (QLD) opened at Springfield in October 2011; the first store in New South Wales (NSW) opened at Gregory Hills in December 2011; the first store in Western Australia opened at Baldivis in August 2012 and the first store in South Australia (SA) opened in Mount Gambier in August 2012.[9] A second store in SA followed at Adelaide Airport in December 2014.

On 12 August 2014 it was announced that due to lower than expected sales per store and ongoing trading losses, the store roll out plan had been revised, and previously advised targets would not be met.[10] The store roll out plan would be slowed, with a target of 10 - 15 stores per year from thereon, with a focus on metropolitan stores in New South Wales, Queensland and South Australia.

Also announced was a revised in-store offer, with more space to be allocated to hardware, gardening and trade categories, and further differentiation in project categories such as kitchens and bathrooms.

A new managing director (Matt Tyson) was appointed, replacing Melinda Smith, who had replaced initial managing director Don Stallings in July 2013.

The final store to open was at Penrith in New South Wales, which opened in December 2015, with an official opening on 16 January 2016.[11]

Demise & Closure[edit]

On 18 January 2016 Woolworths announced that it intended to "either sell or wind up" Masters Home Improvement. Chairman Gordon Cairns said that it would take years to become profitable and that the ongoing losses could not be sustained.[12] To facilitate the sale or windup Woolworths would buy back a 33.3 per cent interest in the joint venture held by the Lowe's subsidiary WDR Delaware Corporation.[13]

Managing Director Matt Tyson departed in February 2016 and was replaced by the general manager of finance, David Walker.

Following a 8 month review process in which offers for the business were considered, it was announced on 24 August 2016 [14] that all Masters stores would cease trading on or before 11 December 2016,

GA Australia (part of the Great American Group, a wholly owned subsidiary of B Riley Financial) was appointed to manage the sale of inventory, and provided an underwritten recovery to deliver gross proceeds of approximately $500 million.

Home Consortium (a joint venture between Aurrum Group, Spotlight Group and Chemist Warehouse) acquired the Masters property portfolio, including 40 freehold trading sites, 21 freehold development sites and 21 leasehold sites.

A number of the sites were to be converted into Bunnings Warehouse stores, with the remaining sites to be repurposed into multi tenant large format centres.

Woolworths acquired 3 freehold sites and took assignment of 12 leases.

The closing down sale commenced on Monday August 29, with discounts rising to 90% in the final days.

Store Locations[edit]

At the time of closure there were a total of 63 stores in operation across all mainland states plus the Australian Capital Territory (ACT). There were no stores in Tasmania or the Northern Territory.

Store locations were:

ACT: Canberra Airport.

NSW: Albion Park, Bathurst, Chullora, Coffs Harbour, Gregory Hills, Heatherbrae, Hoxton Park, Lismore, Marsden Park, Northmead, Penrith, Rouse Hill, Rutherford, St Mary's, Taree, Wagga Wagga & West Gosford.

QLD: Bundall, Bundamba, Cairns, Everton Park, Mackay, Morayfield, Nerang, North Lakes, Parkinson, Richlands, Robina, Rockhampton, Springfield, Tingalpa, Toowoomba & Upper Coomera.

SA: Adelaide Airport & Mt Gambier.

VIC: Ballarat, Box Hill, Braybrook, Burnside, Carrum Downs, Cranbourne, Dandenong, Hawthorn East, Keysborough, Knoxfield, Mornington, Northland, Oakleigh South, Pakenham, Roxburgh Park, South Morang, Sunbury & Williams Landing.

WA: Baldivis, Bayswater, Brighton, Bibra Lake, Ellenbrook, Forrestdale, Joondalup, Landsdale & Mandurah.

There were an additional 23 development sites across Australia where a Masters store was planned for opening. This included sites at Bennetts Green (NSW), Chirnside Park (VIC), Fairy Meadow (NSW), Kirrawee (NSW), Maroochydore (QLD), Nowra (NSW), Noarlunga (SA) and Parafield (SA), where stores were already under construction.

In February 2017 it was announced Bunnings would take over the stores at Mount Gambier (SA),[15] Gregory Hills (NSW)[16] and Rockhampton (QLD)[17] plus 4 locations in WA (Baldivis, Landsdale, Bayswater and Mandurah).[18]

Operating Results[edit]

A Masters Home Improvement store in Canberra, Australian Capital Territory.

According to Woolworths Limited annual reports,[19] Masters results were:

Financial Year Sales A$ millions +or- % Prior Year EBIT A$ millions Stores open at end of FY
2011-2012 $146 NA ($117.4) 15
2012-2013 $529 262% ($156.6) 31
2013-2014 $752 42% ($176.0) 49
2014-2015 $930 24% ($227.4) 62
2015-2016 $1,133 22% ($233.5) 63

References[edit]

  1. ^ Letts, Stephen; Morgan, Elissa (2016-08-24). "Woolworths to shut Masters by year end, Metcash buys Home Timber and Hardware". ABC News. Retrieved 25 August 2016. 
  2. ^ a b Sales report. "Full Year Results - Financial Year 2015, Page 21" (PDF). Retrieved 16 November 2015. 
  3. ^ "Masters Plan For DIY Market". Melbourne: theage.com.au. 3 May 2011. Retrieved 18 May 2011. 
  4. ^ "Woolworths to enter $24 billion hardware sector" (PDF). Woolworths company announcement. 25 August 2009. 
  5. ^ a b Speedy, Blair (3 May 2011). "Woolworths reveals plans for hardware venture". theaustralian.com.au. Retrieved 18 May 2011. 
  6. ^ "Masters Website". Masters Home Improvement. Retrieved 18 May 2011. 
  7. ^ "Billion dollar battle for DIY". australiancreative.com.au. Retrieved 18 May 2011. 
  8. ^ "Woolies aims to master hardware". smh.com.au. 3 May 2011. Retrieved 18 May 2011. 
  9. ^ "$80m shopping complex opens". borderwatch.com.au. 10 Aug 2012. 
  10. ^ "Update on home improvement" (PDF). Woolworths Limited company announcement. 12 August 2014. 
  11. ^ "Is this Masters store the most shortlived retail outlet in history of shopping". Sydney Morning Herald. 19 January 2016. 
  12. ^ "Woolies winds up Masters". Courier Mail. News Corp. 17 January 2016. Retrieved 17 January 2016. 
  13. ^ Ryan, Peter; Janda, Michael (17 January 2016). "Woolworths to exit doomed Masters hardware venture". ABC News. Retrieved 11 July 2016. 
  14. ^ "Woolworths Update On Home Improvement Exit". Masters News. Masters Home Improvement. 28 August 2016. Retrieved 5 September 2016. 
  15. ^ SCA Property Group company announcement (6 February 2017). "SCA Property Group announces First Half FY17 results" (PDF). 
  16. ^ "Bunnings Group could take over the Masters Home Improvement site at Gregory Hills". Daily Telegraph. 2 February 2017. 
  17. ^ "Bunnings reveals future of Yaamba Road warehouse". The Bulletin. 1 February 2017. 
  18. ^ "Bunnings swoops on 4 old Masters stores in WA". WA Today. 9 February 2017. 
  19. ^ woolworthslimited.com.au

External links[edit]