Ann: Intention to demerge Coles - Briefing Presentation, page-59

This change may accelerate WOW's plans with Big W, with plenty of talk about Big W being on the chopping block.

I suspect that Target has a bleak future as a standalone brand. I noticed that its headcount continues to fall, now at 14,000 after being over 21,000 in 2014.

The BUK experience is interesting though with some concerted effort yielding some dividends. Morgan Stanley are saying that the 15 Bunnings are operting well; however, it is the Homebase stores that are killing the UK experiment:

Homebase store looked distressed…but Bunnings store was thriving. Homebase's performance has significantly deteriorated and our store walk highlighted the reasons for this. The Homebase store we walked had: (i)excessive clearance stock in prime real estate; (ii)very little staff or customers; (iii)high out-of-stock levels; (iv) significant wear and tear; but in contrast (v) a well presented garden centre. By comparison the Bunnings store was fully staffed, had few if any out-of-stock issues, was clean and tidy and had 10-20x the number of customers vs the Homebase store. It looked like a store that was thriving, albeit some categories like BBQs looked overstocked with too much range. The trade offer was relatively poor,especially when compared to much range.

They conclude that WES will likely exit the UK at a cost of 1.4 billion due to lease payouts and redundancy costs. They say that there is little appetite for big box and are in fact retailers are shrinking their footprint and focusing on high traffic areas.

I do not necessarily agree with Morgan Stanley; however, it is a cause for some concern.