Woolworths (WHL) – Changing Tack

Woolworths announced a plan to reduce space within David Jones. We compare this plan to the initial deal roadshow documents from 2014, and find a fundamental change in strategy may have taken place. The reduction in space could substantially increase David Jones’ exposure to high income and CBD areas, which may undermine the rollout of private label product. Also, the space cuts could limit the growth of smaller format stores, and inhibit the rollout of David Jones’ food offering.