Bulletin: Woolworths' Balance Sheet Will Withstand Impact Of Off-Market Buyback

MELBOURNE (S&P Global Ratings) April 1, 2019--S&P Global Ratings today said that Woolworths Group Ltd.'s (BBB/Stable/A-2) credit metrics can accommodate its A$1.7 billion off-market share buyback. The company's review of its Big W department store business has identified 30 stores and two distribution centers for closure over the next three years, costing A$270 million. The review has also adopted a more conservative level of margin recovery that resulted in A$100 million of noncash impairments during the year ending June 30, 2019. These results highlight the ongoing subpar performance of the discount department store segment. Offsetting the cash outflow from the share buyback is the A$1.1 billion gain from the sale of Woolworths' petrol business to EG Group. We believe that

...MELBOURNE (S&P Global Ratings) April 1, 2019--S&P Global Ratings today said that Woolworths Group Ltd.'s (###/Stable/A-2) credit metrics can accommodate its A$1.7 billion off-market share buyback. The company's review of its Big W department store business has identified 30 stores and two distribution centers for closure over the next three years, costing A$270 million. The review has also adopted a more conservative level of margin recovery that resulted in A$100 million of noncash impairments during the year ending June 30, 2019. These results highlight the ongoing subpar performance of the discount department store segment. Offsetting the cash outflow from the share buyback is the A$1.1 billion gain from the sale of Woolworths' petrol business to EG Group. We believe that Woolworths' allocation of sale proceeds to capital management initiatives is in line with our expectations. Our base case for Woolworths' credit metrics for fiscal 2019 factor in this expectation. We expect Woolworths...

Bulletin