12/4/2008 10:53:00 AM
Woolworths price cuts worry operators
The restructuring firm running Woolworths is likely to cut prices on its phones in the run-up to Christmas, prompting fears from operators that their stock in the retailer’s stores will be targeted by box breakers.
Restructuring firm, Hilco, was drafted in by the administrator, Deloitte, to maintain sales through Woolworths’ busiest period, while the administrator searches for buyers for the business.
Meanwhile, operators have tens of thousands of subsidised handsets across the retailer’s 815 stores and are acutely aware they have no means of recovering clawbacks if the handsets are not activated by genuine customers.
One source close to the matter said the retailer could not guarantee its prices would not be cut as the company looks to generate cash.
A spokesman for Deloitte has confirmed its stores will remain open over Christmas and it has no ‘immediate plans’ to change pricing policies. It would not confirm whether Woolworths would limit the number of handsets bought by a single customer.
Woolworths is a major mobile phone retailer in the run-up to Christmas, with an estimated 400,000 handsets sold in the last six to eight weeks of the year.
Woolworths increasingly sourced its phones directly from networks. Orange, O2, Virgin Mobile and Vodafone declined to comment on whether Woolworths owes them money, but several operator sources claimied there was still risk across the board.
T-Mobile claimed it stopped supplying Woolworths directly in September, following a risk assessment by its credit insurers. It added: ‘Woolworths holds some old T-Mobile stock but no current lines, so any clearance promotions will have no impact on sales through other channels in the run-up to Christmas.’
It is understood that Woolworths’ administrators are currently in talks with the four distribution centres that supply all the stores. It said it is currently ‘in discussions’ with suppliers, as well as with several parties interested in buying the business.
Carphone Warehouse, along with the owner of Sainsbury’s and Ryman, Theo Paphitis, are believed to be among 10 bidders who have approached the administrators about purchasing some or all of the stores.