As a competitive manoeuvre it has been an epic failure.

Contrast is striking

As a final ignominious piece,the announcement by Woolworths to exit Masters coincided with Wesfarmers finalising a deal to take the successful Bunnings brand to the UK – starting with the acquisition of the Homebase chain for $705 million.

Woolworths new chairman Gordon Cairns conceded on Monday that he was not sure whether under a new owner Masters could be turned around to profit but thought that Woolworths could not achieve this outcome in a time frame the company would be comfortable with.

On his appointment in September Cairns asked management to look five to ten years forward.and produce their most optimistic outlook for Masters,the worst case scenario and the most likely one. The board sought outside experts to'pressure test'management's assumptions.

"That showed that in contravention to previous plans that we had been working on it was going to take us a considerable amount of time to get to break even and the decision the board had to take was that,given that,was (whether) the market would have the patience to tolerate those losses for a considerable amount of time and did we have the risk appetite to continue,"Cairns said on Monday.

Best case scenario not enough

The scale of this disastrous foray into the home improvement sector is breathtaking.

He said that"even the newer stores that are doing quite well (although Cairns does not define doing quite well) are not meeting their capex expectations. The establishment of new store chews through $40 million in capex. …and you are looking at a considerable period of time before they break-even – never mind the original stores".

Even under the best case scenario the business would not deliver an acceptable return even in five years,he said.

"It's not a great scenario for the future of the business."

The outcome of this review must have been a jolt for the board which has overseen,in the past six months alone,the addition of five new stores to the portfolio. Other stores are still under construction – all of which will be completed but will never trade.

Uncertain future for staff

As for the 7000 Masters'staff it will be an uncertain future even though some will be absorbed into the wider Woolworths empire.

Just how much the home improvement exercise will cost Woolworths is not yet known. Its US partner Lowes has also thrown in the towel and exercised its option to require Woolworths to buy out the US company's one third stake for an amount that will be determined by an independent expert as fair value.

Woolworths has put the value of this Lowes liability in its books as $886 million but this was based on Masters operating as a going concern..

So it's a fair bet Woolworths would be hoping an independent expert would value the option at less than this amount.

In addition Woolworths will need to write down part or all of the $2.8 billion book value of its investment in Masters.

No guarantee of a buyer

Meanwhile there are no guarantees that Woolworths will be able to find a buyer for Masters which is still racking up losses.

A more realistic outcome would be winding up the business and selling off sites and inventory,property and equipment.

If the competition regulator will allow Bunnings to take some of the 63 Masters sites then it would probably further beef up its network.

For investors in Woolworths the news that there had been a line drawn in the sand on Masters was wildly positive and testament to the view that pursuing the business was a flawed and costly strategy. Its share price rose by around 5 per cent in an otherwise falling market.

Neither Cairns nor soon-to-depart chief executive,Grant O'Brien were keen to mull over history nor the rationale or cost of the Masters strategy.

Instead they repeated the same message – that the focus was on the future and improving supermarkets,liquor and discount department store operations.

Supermarkets and Big W have been suffering over the past few years. The flagship supermarkets operations had lost market share and growth as a result of uncompetitive pricing – as they desperately attempted to claw back margins.

And it looks like it will take a while to re-establish Woolworths credentials as a star performer and even longer before the group will look to move into new areas of retailing.

Cairns said yesterday that one has to"earn the right to do that".

Meanwhile Wesfarmers has earned a licence to expand based on the success of its retail operations and particularly those of Bunnings.

And ironically thanks to the likely closure of most of the Masters outlets,Bunnings has been given the opportunity to pick up additional home improvement sales and further turbo-charge its Australian earnings.