The Woolworths Limited (ASX: WOW) share price could be heavily traded this morning after the company's multi-pronged market update released before the market open.
What did Woolworths announce?
The company announced the successful completion of the sale of its Petrol business to EG Group, with the proceeds to be returned to shareholders via a $1.7 billion off-market buyback on 16 April 2019.
Management said it remains focused on maximising shareholder value and will return the Petrol proceeds consistent with its 1H19 guidance.
The $1.7 billion buyback complements dividends of $1.4 billion already paid to shareholders this financial year through FY18 final and special dividends and the 1H19 interim dividend. In line with several other S&P/ASX200 Index (ASX: XJO) companies, the buyback will allow Woolworths to reduce its franking credit balance ahead of potential changes following the May 2019 Federal Election.
The sale is likely to result in a gain on sale of $1.1 billion to be recorded as a significant item in the FY19 results.
What's happening with Big W?
Following the conclusion of the BIG W network review, Woolworths Group has identified approximately 30 BIG W stores for closure over the next 3 years and 2 distribution centres that will close at the end of their leases.
The cost of exiting these sites will result in a P&L charge of approximately $100 million of non-cash asset impairments reflecting a more conservative level of margin recovery expected from BIG W.
Management said details of possible store closures will not be released due to ongoing discussions with landlords and in the interim, all stores and distribution centres will continue to trade as normal.
For investors that aren't too keen on Woolworths or the Consumer Staples sector, this top-rated stock in a booming $22 billion industry could be the key to unlocking portfolio growth in 2019.
