Foodland on track for expansion

On June 25, the Australian grocery group Foodland Associated Ltd. announced it would pay US$81m for 36 Franklins supermarkets and two warehouses outside its home base of Western Australia, reports Reuters. Dairy Farm International Ltd, Franklins' Hong-Kong-based parent company, is offloading loss-making Franklins, Australia's number-three supermarket chain. Most of the newly acquired supermarkets are in Queensland in Australia's tropical north and northern New South Wales, the nation's most populous state, while the purchase includes a warehouse and fresh produce facility, both in Queensland. According to Trevor Coates, managing director, "The funding will come from a combination of cash reserves with a small amount of financing."​ Foodland's goal is to boost turnover, currently at A$500m and to bring margins into line with the 4.5 per cent earnings before interest and tax margin achieved by its 29 Action supermarkets in Western Australia, he added. Dairy Farm has already sold 67 Franklins stores to Woolworths Ltd. and 53 to South Africa's Pick'n Pay, with others to be sold to independent operators. Foodland would like to buy Dairy Farm's Woolworths (New Zealand) Ltd stores, but must await a competition ruling from the High Court of New Zealand on which test the competition watchdog should apply to its merger plans. Coates expects the High Court to release its finding as early as Tuesday, and is rather confident of the decision. Source: Reuters