Franklins is likely to be sold within the next few months, according to Paul Simon, the former CEO of Australia’s third largest supermarket chain. Simon said today (18 February) that any decision on the future of Franklins would depend on whether the Australian Competition and Consumer Commission (ACCC) would give the nod to a potential distribution of the Franklins stores among the rival giants Woolworths and Coles Myer.
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Competitions within the Australian supermarket sector is largely restricted to three main players, and with the death knell sounding for Franklins, the ACCC will be anxious not to restrict the market to just two top players.
Many are hoping that the sale of Franklin’s stores will provide an opportunity for German discount giant Aldi to get a larger hold on the sector. Simon revealed that Aldi will be able to profit from the “vacuum at the bottom end of the market,” created when Franklins began to emulate its more costly rivals. This decision has largely been blamed for the losses incurred by the group and its falling market share.
Another Australian retailer, Foodland Associated, admitted that it would be interested in expanding along the east coast through the acquisition of Franklins stores, but revealed that no talks had yet been held with the struggling retailer.
Others maintain that competition will not be an impediment to a sale, however. But the current lack of offshore interest is causing concern.
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By GlobalDataSpeculation of a sale amid last month’s review into the loss making firm met with blanket denial from Franklins and its Hong Kong parent Dairy Farm international. Simon maintains however that it will only be a matter of time, and that one the decision to sell has been made, things will progress quickly.
Full-year earnings for Franklins are due to be released by Dairy Farm on 26 February, and analysts are expecting losses to amount to US$20m.
