Woolworths Limited
(ASX:WOW) says actual losses for its start-up hardware business Masters are likely to be bigger than expected, admitting its original plans were optimistic.
Woolworths had forecast Masters to record an EBIT for the year of a loss of $119 million, but that’s expected to blow out to a pre tax loss of $157 million.
The company says the higher losses were due to overly optimistic sales budgets, relatively higher wage costs for new store openings and lower margins due to the sales mix.
Woolworths is still forecasting that Masters will break even during the 2016 financial year, assuming more moderate growth in sales per store and improvements in gross margins.
The company expects to narrow the losses in the 2014 financial year.
Woolworths generated a net profit of 1.16 billion in the first half of fiscal 2013.
