Big W will shut 30 stores over the next three years, as well as two distribution centres.
Parent company Woolworths will take a $370 million hit to its full year results, including $270 million in lease and exit costs and $100 million of non-cash asset impairments.
The move will see it shutter around 16% of its department store network.
Woolworths CEO Brad Banducci said despite a comeback in the third quarter, where comparable sales grew 6%, the brand was still in need of consolidation.
“As foreshadowed at our half-year 2019 results, while the recovery in trading for Big W is encouraging and there remains further opportunity for improvement, the speed of conversion to earnings improvement is taking longer than planned.
“This decision will lead to a more robust and sustainable store and DC network that better reflects the rapidly changing retail environment.
"It will accelerate our turnaround plan through a more profitable store network, simplifying current business processes, improving stock flow and lowering inventory."
Big W is expected to report a loss before interest and tax of $80 million to $100 million for fiscal 2019, compared to a $110 million loss in fiscal 2018.