Woolworths: Turnaround of Small New Zealand Business Not yet Evident

The noncash goodwill write-down of Woolworths’ small New Zealand business has no direct impact on our AUD 27.50 per share fair value estimate for the group, nor our underlying earnings estimates. However, the turnaround of the New Zealand business is likely to take longer, with management citing a weaker medium-term market outlook as a reason for the impairment. We’ve reduced our group earnings estimates by an average of 1% over the next decade to fiscal 2033 and the New Zealand segment represents a mere 11% of group operating earnings over the period.