The float has been abandoned in the wake of figures last week showing the retail sector is in recession slipping 0.1 per cent in March 2017, and falling in three of the last four months.
Last week’s retail turnover figures from the Australian Bureau of Statistics are the weakest figures since 2012 and the third weakest since 2000 when the GST introduced.
Wesfarmers has also pulled the float in the lead up to Amazon opening in Australia, an event that’s likely to force many retailers to the wall.
Ric Spooner, a chief market analyst at CMC Markets in Sydney, said Amazon would hurt Officeworks because the printers and phones and paper and pens it sells are all available online.
“It seems highly likely that Amazon will take share and put downward pressure on margins,” Mr Spooner told Bloomberg.
“Once people know what they want, it’s a matter of replenishing your existing stocks. And they’d have it delivered.”
The pulling of the float also comes in the wake of recent retail casualties including David Lawrence, Marcs, Payless Shoes, Pumpkin Patch, Rhodes & Beckett, Herringbone, Seduce, Laura Ashley, Josh Goot and Kit & Ace.
“In light of current equity market conditions, Wesfarmers has determined that an IPO of Officeworks at this point in time would not realise appropriate value and would not be in the best interests of its shareholders,” Wesfarmers said in its statement to the market.
It said Officeworks had more than doubled its earnings and improved its return on capital from 5.7 per cent in the 2009 financial year to 13.9 per cent in the first half of the 2017 financial year.