Updated

Retail heavyweight, Woolworths, is abandoning its multi-billion dollar foray into the Australian home improvement market following years of losses.

The company is looking to either sell or wind up its struggling home improvement arm, which includes the Masters home improvement and Home Timber & Hardware chains.

Chairman, Gordon Cairns, says the retailer’s recent review of the business indicates it will take many years for Masters to become profitable.

“We have determined we cannot continue to sustain ongoing losses from this business,” he said in a statement on Monday.

“We intend to pursue an orderly prospective sale or wind-up of the business.”

Investors were clearly impressed, with Woolworths shares defying widespread falls on the stock market to climb $1.46, or 6.4 per cent, to $24.12 by 1049 AEDT.

Cairns said the decision will allow the company to focus on strengthening its core businesses, including its supermarket chain which is battling competition from rivals Coles and Aldi.

Before Woolworths can exit its home improvement business it must take full control of Masters.

Woolworths plans to buy out its home improvement joint venture partner, the US-based Lowe’s, which currently holds a 33.3 per cent stake in the business.

In the meantime Woolworths will review the value of its 66.7 per cent stake in the home improvement business, which has been under intense pressure from rival Bunnings.

Woolworths’ decision comes as staunch rival, Wesfarmers, pushes ahead with the international expansion of Bunnings.

Wesfarmers has agreed to buy 265 Homebase stores for STG340 million ($A705 million) from Home Retail in the UK, with plans to rebrand the chain, Bunnings.

In October, Woolworths reported that Masters had enjoyed a 23.5 per cent rise in quarterly revenue after slowing down the pace of store openings and focusing on a revamp of the brand.

AAP

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