They undoubtedly paid too much in hindsight as they bought a WA-based retail business in mid-2014, just before the resources bubble finally collapsed and took the whole WA economy down with it.
I'd be very surprised if they're looking to sell City Farmers now, given:
1) They'd be doing so at what i suspect is near the very bottom for WA's retail cycle (i.e. now would be a really bad time to voluntarily sell a WA-heavy retail business);
2) They've done all the hard work around integration and making it more profitable; and
3) They've invested significantly in City Farmers since acquisition, and continue to invest in the brand - for example, GXL opened two new City Farmers outlets in 1HFY17 (Baldivis & East Victoria Park) and two new outlets in FY16 (Busselton & Albury), and they've installed 3 co-located vet clinics in CF outlets in the last 18 months (Nedlands, Subiaco, and Baldivis). It doesn't really look to me as if GXL is about to throw the towel in on City Farmers given this significant ongoing investment.
GXL Price at posting:
$5.63 Sentiment: Buy Disclosure: Held
