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Is Woolworths Limited about to shut Thomas Dux?

Woolworths Limited (ASX: WOW) faces yet more issues with media reports that the company is shutting more than half of its Thomas Dux stores across NSW.

Thomas Dux is an upmarket grocer, selling premium foods, including artisan bread, imported cheeses and a host of celebrity chef products.

The Daily Telegraph reports that Lane Cove is ceasing trading on February 29, and Crows Nest will follow in April. Hornsby is reported to be closing no later than November 30, 2016. The Port Melbourne store will also close at the end of February, and follows the Richmond, Melbourne store. Glen Waverley is also reported to be closing soon.

Lane Cove was the first Thomas Dux to open, back in 2008. On its Facebook site, Thomas Dux says, “…there (are) a number of locations that are providing a poor trading environment for us.

A spokesman for Woolworths has also told media, “Woolworths has been reviewing our Thomas Dux stores and brand as part of our small store strategy. As part of this review, we will be closing four Thomas Dux stores in 2016.

The North Shore Times reports that Woolworths will instead begin trialling a Thomas Dux section in some metropolitan supermarkets instead, as well as offer products online. The gourmet range is expected to be available at a new store in Crows Nest.

The store closures will leave just four stores left, Paddington and Monavale in NSW and Armadale and Black Rock in Victoria.

Woolworths had originally planned to offload the whole chain, with a price tag of between $10 and $20 million according to media reports last year, but the closure of half the stores suggests the remaining four are also likely to be closed sooner, rather than later.

Foolish takeaway

Thomas Dux would have been a great idea – if it had worked. Now it’s just another mess Woolworths’ management need to clean up. But at least they are taking action – like they did with Masters, and a further sign Woolworths may be closer to a turnaround than many think. Woolworths share price was down 1.1% at $24.17 in lunchtime trading.

 

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Motley Fool writer/analyst Mike King owns shares in Woolworths. You can follow Mike on Twitter @TMFKinga

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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