Woolworths, Lowe's tip another $45 million into Masters

Sue Mitchell
March 10, 2015
The Age
Woolworths and its home improvement partner, Lowe’s Companies, have tipped another $45 million into their loss-making Masters joint venture, taking their total investment over the last five years to $3.02 billion.
According to a regulatory filings by their joint venture vehicle, Hydrox Holdings, Woolworths bought another 30 million shares and Lowe’s 15 million shares at $1 a share earlier this month, days after Woolworths reported that home improvement losses rose 60 per cent to $103 million in the December half.
The latest investment follows a $90 million capital injection by Woolworths and Lowe’s in November last year which took their investment to $2.9 billion.
Hydrox is 67 per cent owned by Woolworths and 33 per cent owned by Lowes, which has a put option to sell its stake to Woolworths at market value any time after October 2016.
Analysts expect the home improvement business to lose more than $180 million this year, taking losses over the last three years to more than $500 million, and believe it may not break even until 2019 or 2020.
Sales fall well short
Masters stores are generating annualised sales around $18.5 million, well short of the $29 million to $30 million needed to make a profit.
After conceding last August that the home improvement business would not break even in 2016, as originally forecast, Woolworths has put the brakes on new store development – halving the number of new Masters stores opened each year – and is sub-leasing space on Masters’ sites to other retailers in an attempt to cut costs and generate revenues.
Masters is also expanding its product range, improving layouts to make stores easier to shop, and increasing floor space for faster-growing categories such as bathrooms, gardening and hardware.
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