Bunnings CEO John Gillam steps down

Wesfarmers CEO Richard Goyder tried to talk John Gillam out of quitting after 12 years heading the hardware giant.

John Gillam’s role as Bunnings CEO is coming to an end. This was him in September. Pic: Stuart McEvoy

Wesfarmers chief executive Richard Goyder says he tried in vain to talk Bunnings boss John Gillam out of resigning from the hardware chain last month.

But he ultimately understood that after 12 years at the helm of one of Australia’s most profitable retailers it was time to let Mr Gillam go.

Mr Gillam, who had been seen as a potential successor to Mr Goyder, today stepped down from the high-profile role after a successful 12-year stint.

His departure will see Bunnings Australia and New Zealand boss Mike Schneider and Bunnings UK and Ireland managing director Peter Davis report directly to Mr Goyder.

The surprise announcement follows a sustained period of strong growth at the nation’s largest hardware group, including the successful negation of Woolworths’ foray into the sector.

Woolworths headed for the exit this year after conceding defeat, while at the same time Bunnings pushed offshore with a bold UK acquisition.

In a statement this morning, Bunnings owner Wesfarmers (WES) said Mr Gillam will remain in an advisory capacity, which will include him joining the Bunnings United Kingdom and Ireland advisory board.

Mr Goyder told The Australian this morning that Mr Gillam first approached him a few weeks ago about his resignation plans — and that of course he would have loved to keep him at Wesfarmers.

“It was a few weeks ago, and yes (I tried to talk him out of it) but I also respect his decision, he has been in a demanding role, done a sensational job, and I respect that he thought about things and wants to change the way he does things a bit,’’ Mr Goyder said.

“Someone who has worked as hard and with as much passion as John, obviously you would love having him on your side, on your team, and you always want that to continue, but you step back and look what he has done.’’

Mr Goyder ranked the closure of hardware competitor Masters, launched by Woolworths in 2009 and set to close its doors on Sunday, as well as this year’s push into the UK market through Bunnings’ purchase of British hardware retailer Homebase, as key achievements.

“This year with Masters closing its doors, and the UK thing, Bunnings is so well positioned and I think that there is a bit of me that understands where John is at.’’

Mr Goyder said investors should not fret over the future direction and success of Bunnings, which has generated uninterrupted growth in profitability for two decades. Succession planning at the hardware chain was well in place.

“John has put in place a structure, we have put in place a structure, 12 months or so ago, that elevated John in a way in Bunnings and put Mike Schneider in charge of Bunnings Australia and New Zealand, and Peter Davis in charge of Bunnings UK and Ireland, so I think we have actually given opportunities to people in Bunnings 12 months ago and this is now just another transition from that.

“John will continue to chair the Bunnings council, he will still be heavily involved in the UK and involved in mentoring the senior people in both businesses.’’

The timing or Mr Gillam’s departure is unlikely to be well received given it’s a distraction as Wesfarmers’ Coles is battling a suddenly resurgent Woolworths in the supermarket space, while the Bunnings entry to the UK through the purchase of Homebase has stirred controversy and is only in its infancy.

Strident critic David Errington, an analyst for Bank of America Merrill Lynch, has previously slammed the $658 million Homebase buy as a decision akin to Woolworths’ calamitous home improvement foray and engaged in a heated exchange with Mr Gillam back in June.

At that time he questioned whether Mr Gillam and Mr Goyder would stick around to see through the three-to-five-year plan through, a question that has been answered earlier than expected.

At a recent lunch event in Melbourne, Mr Gillam pleaded for patience through the process as it “learned like crazy” in the UK market.

His confidence in the venture was unwavering, but he noted the gradual shift from Homebase to Bunnings branding would take up to five years.

“We don’t expect the first store to knock the light outs, but we ­expect it to be more right than wrong, and from there we’ve got to learn like crazy,” he said.

“We could be in stage one for quite some time and that won’t ­bother us.”

In early trade, Wesfarmers shares were steady at $41.19, underperforming against a 0.7 per cent rise for Woolworths and a 0.5 per cent advance in the broader market.

Earlier, in a statement, Mr Goyder praised the outgoing Bunnings leader.

“John has worked in our business development team, been chief financial officer of Bunnings, company secretary of the Wesfarmers Group and managing director of CSBP, before taking over as leader of Bunnings in 2004. He was also Chairman of Officeworks for eight years,” Mr Goyder said.

“In every role he has been outstanding and left an indelible and positive legacy. His performance at the helm of Bunnings has seen him now recognised as one of Australia’s leading retailers and Bunnings is now a national institution.”

Gillam led Bunnings to dominance over Woolies’ Masters.

Mr Gillam said he was confident his joint replacements would maintain the momentum built up over the past decade, while hinting at plans for a fresh challenge outside Wesfarmers in the near-term.

“I firmly believe that now is the right time to pass on the leadership baton,” he said.

“Mike and PJ have been outstanding leaders in helping drive the growth and success of Bunnings and are well placed to take the business forward. I look forward to continuing to support the Bunnings team in an advisory capacity, while also having the opportunity in the coming years to pursue other interests.”