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Losses escalate at Bunnings UK & Ireland

Bunnings external store image

Earlier today, Wesfarmers released their full year accounts for the 12 month period ending 30 June 2017, the first time the company has been able to post a full years trading results for the Homebase/Bunnings business in the UK and Ireland, having completed the acquisition on 29 February 2016.

Download the full year results here

Download the full years results presentation here

Overall the Bunnings Division including Australia, New Zealand (BANZ) and UK & Ireland (BUKI), delivered an EBITDA of $1.245bn on a turnover of $1.486bn a 2.6% improvement over the previous year. Total sales growth for the combined division reached 8.9%, with like for like sales up 7.3%. However, all the good news came from BANZ, where turnover grew 8.9% and profit +10%.

In Bunnings UK & Ireland the position has worsened, with the business delivering a trading loss before tax of £54m for the full year on a total turnover of £1.229bn, with £26m of this loss, being generated in the last six months. Michael Schneider (MD Bunnings Group) confirmed that £19m of this loss was due to transition and restructure costs, including the cost of exiting the Homebase concessions and the investment in the pilot store programme.

He went on to say that like for like sales in their Q4 declined 6.8%, claiming this was caused by on-going disruption impacting the Homebase business and the decline in the sales of kitchens and bathrooms due to their change of strategy, re-positioning and the cessation of their installation services.

This full year turnover figure of £1.229bn compares unfavourably to a final full year turnover for Homebase of £1.433bn under Home Retail Group ownership (52 weeks to 27 February 2016).

Read – Home Retail Group reports end of year trading figures for Homebase & Argos

Schneider confirmed the business had exited all non-core products, stand-alone services and concessions and that they were in the process of building a high-performing culture with positive engagement from the team.

With regard to the pilot stores, he confirmed that they had received a high level of supplier support and received positive customer feedback. There was a slight back-track on the previous announcement that 20 pilot stores would be open by the year end, saying that between 15-20 would be open, subject to approvals. Once again, he very clearly stated that 'further investment was predicated on successful trials'.

Commenting on the result, Bunnings UK and Ireland managing director, Peter Davis, said: “While there is still more work to be done, the team has made good progress in repositioning the Homebase business with a core home improvement and garden offer with ‘Always Low Prices’.

“During the year we successfully opened four Bunnings Warehouse pilot stores and we look forward to bringing the Bunnings offer to more communities across the UK in the run-up to Christmas with the team working hard to have 15 to 20 pilots open or near completion by the end of the year.” 

Source: Insight DIY Team

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17 August 2017

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