After years of losses, store closures and persistent questions about its future, Big W has posted a $64 million profit for the latest financial year, marking what management describes as a critical first step in a long-overdue turnaround. But with fewer than half as many stores as dominant rival Kmart and a customer base that has drifted away over more than a decade, the discount retailer still has a significant gap to close.
A Decade in Kmart's Shadow
The scale of the challenge facing Big W is not subtle. The chain operates 178 stores nationally, roughly half the footprint of Kmart, which has more than 300 locations across the country. While Kmart has consistently generated more than $1 billion in annual profit, Big W's financial results have been sliding for several years, bottoming out at a loss of $33 million in the 2025 financial year.
The contrast is felt acutely by everyday shoppers. One Sydney mother of two said she visited Kmart at Chatswood Chase just last week, picking up lunch boxes, organisational baskets and decorative trays, while her teenage son and his friend made their first solo shopping trip there. Her last visit to Big W, by contrast, was roughly seven years ago. She recalled the store as having a "warehouse feel", harsh lighting, a cluttered apparel section and a limited homewares range.
"If I have to travel far and wide to find this store when it's not convenient, and it doesn't provide all the categories I need, why should I go there?" she said.
That sentiment reflects a broader pattern. Kmart's own-brand label Anko has become a household name, and the retailer has cultivated a near-cult following among Australian families seeking affordable homewares and clothing. Big W has struggled to carve out an equivalent identity.
What Drove the Return to Profit
The $64 million profit recorded in the most recent financial year was driven by less aggressive discounting, stronger clothing sales and a growing marketplace business. Big W managing director Dan Hake said the result represented the completion of only the first phase of a longer transformation.
"We're still early days in our transformation," Hake said. "We've had an important milestone this financial year, which was to prove out that we can step up our game in product. We can be absolutely competitive on price, and we can be lean and consistent enough in our operations that we can still make a profit at the end of the year. That's just step one."
The core of the turnaround strategy is straightforward: keep prices low, improve product quality and tighten operational efficiency. Big W's traditional strengths have centred on its children's range, a substantial books department, and toy aisles stocked with familiar brands. Those foundations remain, but significant investment has been directed toward clothing, health and beauty, and homewares.
Store Renovations and a New Shopping Experience
Physical store changes are a key part of the plan. Newly renovated locations feature change rooms painted in colourful pastels, designed to be large enough to accommodate prams. Store layouts are being reconfigured to encourage exploration, with semi-enclosed sections for beauty and tech products. The Plumpton store, located about 45 kilometres west of Sydney's CBD, is among those being used to trial the new format. The enclosed sections serve a dual purpose: drawing customers into browsing and reducing theft.
Pricing remains front and centre. Children's tees are available for as little as $3, and a budget version of the popular barrel-leg jean style sells for $30. Hake acknowledged that families tend to prioritise spending on their children, but said the renovations were also aimed at making the experience better for parents, particularly mothers.
"We know that families spend on their kids first," he said. "But we also want mum to have a great experience."
The continued popularity of brands like Barbie among younger shoppers has helped sustain Big W's toy aisles, alongside Lego, Pokémon cards and Bluey merchandise.
Woolworths Watching Closely
The profit result comes after a period of genuine uncertainty about Big W's place within the Woolworths Group. Earlier in 2025, Woolworths chief executive Amanda Bardwell announced a strategic review of the company's business portfolio, reigniting speculation about a potential sale or exit of the Big W brand. That speculation has quietened somewhat following the improved financial result, but has not entirely disappeared.
With 30 stores already closed in 2019 and a national footprint that remains considerably smaller than Kmart's, Big W faces the ongoing challenge of relevance as much as profitability. Winning back shoppers who have long defaulted to its rival will require more than a single profitable year. Management is aware of that reality, even as it celebrates the milestone.
Whether the turnaround holds, and whether it is enough to secure Big W's long-term place in the Australian retail landscape, remains an open question. For now, step one is done.
