Woolworths plans to sell electronics unit to focus on groceries

Woolworths Ltd, Australia’s largest retailer, plans to sell its consumer electronics unit to focus on its main businesses including supermarkets, which helped drive a 5.1 per cent rise in second-quarter sales.

The Dick Smith electronics chain will be sold under the plan, and Woolworths will take a A$300 million ($318 million) charge, the Sydney-based company said in a statement. Group revenue rose about 5 per cent to A$15.1 billion in the three months ended January 1, from a year earlier, it said separately, matching the average estimate of four analysts surveyed by Bloomberg News.

Woolworths counts on everyday items for about 84 per cent of supermarket revenue and plans to boost the sale of more- profitable fresh produce and to double its range of private- lable brands. The company’s focus on staples has enabled it to withstand slower discretionary spending that prompted cuts to profit forecasts at other retailers, including rival electronics chain JB Hi-Fi Ltd.

“The investment and management attention given to Dick Smith have been disproportionate relative to its position within the Woolworths group,” the company said. “The company’s current focus is on accelerating growth in its core trading divisions.”

Woolworths shares rose 1.5 per cent to A$24.82 at 10:13 am in Sydney. The stock has declined 1.2 per cent this year after dropping 6.9 per cent in 2011.

Same-store Australian grocery store sales were expected to rise 1.6 per cent, according to the average of four analyst estimates.

The Big W discount department store chain posted a 0.1 per cent decline in second-quarter sales to A$1.3bn, while the consumer electronics unit had a 3 per cent increase in revenue to A$581m.