* Shares make biggest daily gain in 19 yrs
* Banducci clearing the decks - analyst
* Plans to shut 30 stores in Australia and NZ
* Ezibuy sale floated (Updates with shares, analyst and CEO comment)
SYDNEY, July 25 (Reuters) - Woolworths Ltd WOW.AX , Australia's top grocer, on Monday said it will book costs of up to A$1 billion ($746 million), axe 500 jobs, close stores and consider selling online retailer Ezibuy in a restructuring aimed at regaining its competitive edge.
Woolworths Chief Executive Officer Brad Banducci said the restructure was part of a three- to five-year recovery plan for the company, which posted its first loss in 23 years in February amid increasing competition from foreign entrants including German discount chain Aldi ALDIEI.UL . the new CEO clearing the decks, like we've seen in countless large company turnarounds," Clime Asset Management senior equities analyst David Walker said.
"This as a turnaround which is consistent with others that have succeeded."
Woolworths shares made their largest daily gain in 19 years on the news, adding 7.1 percent, while Australia's benchmark S&P ASX/200 .AXJO rose 0.6 percent.
Five months after being promoted to the helm of the 91-year-old company, Banducci said "tough decisions" had to be taken to protect Woolworths' position in a market it has long dominated with arch rival Coles, owned by Wesfarmers Ltd WES.AX .
"We're making good progress on rebuilding our business and this is the next step in that journey," he said.
"We are deliberately slowing down the future pipeline of store opening and investing the capital we would've spent on store openings into store renewals."
The company said earnings before interest and tax from continuing operations, before significant items, would be between A$2.55 billion and A$2.57 billion in 2016, down from A$3.74 billion the year before.
Woolworths first-half loss of A$972.7 million included a A$3.2 billion write-off on its Masters hardware chain.
Its Masters debacle coincided with the arrival of competitors like Aldi, which has grabbed 10 percent of the Australian grocery market by some estimates.
JOB CUTS
The 500 jobs being cut were back office roles and another 1,000 positions would be shifted from head office in Sydney into stores, the company said.
There were plans to shut 30 underperforming stores across Australia and New Zealand, and five Big W discount department stores.
Ezibuy would be separated from Big W and Woolworths said it was "exploring options" to sell the online retailer, which it bought only three years ago.
Ezibuy was expected to report a loss in the year to June 2016 of A$13-A$18 million and Big W a loss of A$12-A$17 million, the company said.
($1 = 1.3394 Australian dollars)