After more than a decade spent trailing Kmart as Australia's second-choice discount department store, Big W has posted a $64 million profit in the latest financial year, marking what management describe as a critical first step in a long-overdue turnaround. The result follows years of declining earnings that bottomed out at a $33 million loss in the 2025 financial year, and comes as parent company Woolworths faces ongoing questions about the chain's future.
A tale of two discount chains
The contrast between Big W and Kmart is stark and, for many Australian shoppers, deeply familiar. Kmart operates more than 300 stores nationally and consistently generates more than $1 billion in annual profit. Big W, by comparison, runs 178 stores, a footprint roughly half the size following a wave of 30 closures announced in 2019.
For many consumers, the preference is not even a close call. One Sydney mother of two described visiting Kmart's Chatswood Chase location just last week, picking up lunch boxes, organisational baskets, decorative trays and Anko vases. Her teenage son and a friend also made an independent trip to the same store to buy a pair of slides. Her last visit to Big W, she said, was approximately seven years ago. She recalled the store's apparel section as messy, the lighting harsh and warehouse-like, and the homewares range limited.
"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 captures the challenge facing Big W managing director Dan Hake as he oversees the chain's recovery. Earlier in 2025, Woolworths chief executive Amanda Bardwell fuelled speculation about a potential sale or exit of Big W after announcing a strategic review of the group's "business portfolio shape".
Big W's turnaround strategy
Hake is direct about what the retailer is trying to do: lower shelf prices, improve product quality, and run leaner operations. The profit turnaround has been driven by less heavy discounting, stronger clothing sales and a growing marketplace business.
"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."
Big W's traditional strengths have centred on its children's offering, a prominent books department (large enough that independent booksellers have raised concerns about it undercutting their businesses), and toy aisles stocked with Barbies, Lego, Pokemon cards and Bluey merchandise. The company says its purpose is "to make a real difference for families".
Significant investment has now been directed toward clothing, health and beauty, and homewares. Newly renovated stores feature change rooms painted in pastel colours and designed to accommodate prams, a deliberate nod to the family shopper. Some children's apparel price points sit in the single digits, with kids' tees selling for as little as $3. A budget version of the popular barrel-leg jeans style retails for $30.
Store renovations and the push to compete on experience
Store layouts are being actively reconfigured and trialled across the network. The Plumpton store, located roughly 45 kilometres west of Sydney's CBD, is among a handful of recently renovated locations featuring semi-enclosed sections for beauty and technology products. The design serves a dual purpose: encouraging shoppers to browse more of the store while also reducing theft.
The broader ambition is clear. Big W wants mothers, in particular, to leave with a positive experience rather than simply grabbing a few essentials and heading to a competitor for everything else. "We know that families spend on their kids first," Hake said. "But we also want mum to have a great experience."
For Australians thinking about where their household budget goes, the ability to stretch spending further is increasingly relevant. Smart home spending decisions are a growing priority for many families navigating cost-of-living pressures, and discount retailers sit squarely in the conversation about where value can be found.
What comes next for Big W
A single profitable year does not erase the longer-term structural questions hanging over the chain. With roughly half of Kmart's store network, a brand perception problem among key demographics and a parent company that has publicly flagged uncertainty about its retail portfolio, Big W faces a significant rebuild task.
Hake frames the $64 million profit as proof of concept rather than mission accomplished. The next phase will presumably require translating that operational discipline into consistent performance across a wider store base, while convincing shoppers who drifted away over the past decade to give the chain another look.
Whether the updated store formats, improved product ranges and tighter cost structures are enough to meaningfully close the gap on Kmart, or whether Woolworths ultimately decides to exit the business entirely, remains to be seen. For now, Big W's management are focused on demonstrating that step one was not a fluke.
