Wesfarmers remains patient as sales slide in UK Bunnings stores

WESFARMERS says it wants to test its Bunnings UK pilot stores through the “dark months” of a British winter ­before engaging in a bigger roll out.

Sales at Bunnings Australia and New Zealand surged 11.5 per cent to $2.96 billion as it benefited from the demise of rival Masters.

WESFARMERS says it wants to test its Bunnings UK pilot stores through the “dark months” of a British winter ­before engaging in a bigger roll out.

The plan to “patiently” fine-tune its hardware store model in Britain and Ireland ahead of a wider rollout comes as sales at that business fall at a ­double-digit rate.

PROPERTY BUST OUR BIG THREAT, WARNS WESFARMERS CHIEF RICHARD GOYDER

Its update on a tougher-than-expected push into the £38 billion ($61 billion) British home improvement market came as Wesfarmers on Wednesday said it was considering dropping its quarterly sales updates.

Outgoing chief executive Richard Goyder said he did not see “great value” in quarterly updates given the time and ­effort they took to prepare, while his successor, Rob Scott, branded them a “distraction”.

“Investors like the long-term focus and in many ways quarterly sales reporting is a distraction,” Mr Scott said.

“There are many opportunities we have through the year to ensure the market is appropriately informed.”

Wesfarmers shelled out $705 million for the ailing UK hardware chain Homebase at the start of last year.

Sales slumped 13.8 per cent to £276 million for the three months to September compared with the same period a year earlier, Wesfarmers said on Wednesday.

Wesfarmers outgoing chief executive Richard Goyder. Picture: Colin Murty

The sales drop-off comes after the business posted a £54 million loss last financial year.

Bank of America analyst David Errington said the Bunnings UK experiment had become “a high-risk move”.

Morgan Stanley analyst Tom Kierath said the latest numbers out of Britain were “disappointing”.

Mr Goyder said nine test-model Bunnings UK stores were generating sales growth but that performance had been swamped by disruption across the 244 Homebase outlets that were yet to be rebranded.

It was crucial to test the Bunnings UK model across a full season before rolling it out at scale, he said.

Areas such as garden and outdoor living, which took up considerable floor space, went into “hibernation” during the winter months in Britain, ­unlike in Australia, he said.

“We want to trade them through the dark months so we get a good 12-month view of the stores,” he said.

“It’s (a question of) how we best trade those categories through the dark months.”

Mr Goyder said Wesfarmers knew where it had to ­improve the business and ­remained convinced its assault on Britain’s home improvement market would pay off.

Macca’s perspective.

“This will certainly take longer than we liked but we continue to think there is a considerable opportunity for us to grow a profitable business in the UK,” he said.

Wesfarmers owns Coles, Bunnings, Kmart, Target, Officeworks and a collection of industrial and mining businesses.

Total sales at Coles, its biggest earner, rose 1.5 per cent to $7.96 billion. The more closely watched like-for-like sales, which strips out the impact of stores opening and closing, were up 0.4 per cent for the quarter.

Coles is generating its lowest sales growth since Wesfarmers bought the business a decade ago as it cuts prices — and gives up profit — to fend off a resurgent Woolworths and expanding Aldi.

Sales at Bunnings Australia and New Zealand surged 11.5 per cent to $2.96 billion as it benefited from the demise of rival Masters. Kmart sales rose 9 per cent to $1.36 billion while ­Target sales slumped 6.4 per cent to $602 million.

Shares in Wesfarmers closed 2.9 per cent lower at $41.49.

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