THE Woolworths Group says it is yet to make a decision regarding the future of its chain of BIG W stores, including its Mildura franchise.

According to recent media reports, BIG W could be forced to shut up to one third of its 183 stores in an effort to return to profitability.

This comes after the Woolworths Group announced that the BIG W franchise had recorded a $110million loss last financial year, and a further $8million loss in the first half of the 2018/19 financial year.

Macquarie Wealth Management, in a client note released late last week, indicated that closing 60 stores would come at a massive cost due to the existing $2billion in BIG W lease commitments.

Macquarie said the ultimate cost would “come down to the lease term remaining on these problematic sites and whether the landlord would accept a discount given potential for alternate use, etc.”

“The market may like the removal of uncertain downside given the challenging industry outlook,” it said.

Macquarie said half of BIG W’s stores were located in challenging regional areas. 

“It is unlikely these locations will enable BIG W to regain the momentum required for profitability,” it said. “In a challenging retail environment, we see a reduction in store count as the most likely outcome…

“Given the format of BIG W stores, we believe it would be difficult to reduce space… and that outright store closure is more likely.”

A Woolworths Group spokesperson maintained that no decision had been made regarding the future of any of its BIG W outlets, including its Mildura store.

“At our half-year results in February, we announced a national review of our BIG W store and distribution centre network,” the spokesperson said. “The review is ongoing and no decisions about our network have been made. 

“We will update our team members and the market once the review has been completed.”