Woolworths postpones drinks demerger

Nick Miles
Head of Insight - Asia Pacific
@RetailAnalysis

Date : 25 March 2020

Woolworths Australia has announced that it is to delay the demerger of its Endeavour Drinks business until 2021.

Uncertainty puts demarger on hold

The business was meant to be demerged in-mid 2020. However, with financial markets struggling and the business being forced to close all hotels in the wake of forced shutdown due to Coronavirus, CEO Brad Banducci has been left with no option but to delay the process. Endeavour Drinks combines Woolworths liquor business and its hotels business, which consists of over 330 establishments.

Redeploying staff where poissible...

Despite the enforced shutdown of the hotels by the Australian government, liquor shops attached to hotels (around 600) are still able to trade. As part of the hotel shutdown, around 8,000 staff have been stood down, with Woolworths looking to offer as many as possible alternative roles across the group. Brad Banducci, Woolworths CEO, confirmed that despite the setback, the demerger remains part of Woolworths' plans for the future.

Sales growth across the group...

Like we have seen in grocery stores in Australia and globally, Endeavour Drinks confirmed that it has 'encountering unprecedented and increasing customer demand' in its stores and online in recent weeks. While sales growth has slowed in the past few days across the Group, Banducci said that takings the week before were 'almost twice normal sales' for the business. He continues to say that given the volatility of the situation, it was too early to tell what impact Coronavirus would have on the retailer's annual results.