Bunnings nails it during COVID-19 pandemic, drives Wesfarmers’ earnings

Bunnings has emerged as one of the most successful retailers in Australia in the midst of the COVID-19 pandemic.

Customers have turned to home renovation projects. Picture: NCA NewsWire / Jeremy Piper

There might have been no better time to be the owner of a national hardware chain, with Bunnings once again driving the majority of Wesfarmers’ earnings and emerging as one of the most successful retailers in Australia in the midst of the COVID-19 pandemic.

Bunnings, which now is the key engine of profits for Wesfarmers following the demerger of Coles in late 2018, reported a 13.9 per cent lift in full-year earnings to $1.826bn as revenue also increased 13.9 per cent to $14.99bn.

Excluding the net contribution from property, earnings increased 17.8 per cent on the prior year.

“The strong sales and earnings growth achieved in Bunnings demonstrated the resilience of its operating model and ability to adapt to the changing needs of customers during the year,” Wesfarmers chief executive Rob Scott said.

“Growth in consumer sales was particularly strong as customers spent more time working and undertaking projects at home during the period. Bunnings continued to execute its strategic agenda and accelerated the development of its digital offer during the period. The rollout of Click and Deliver was completed, and the New Zealand e-commerce platform was launched ahead of schedule.”

Bunnings certainly became a key point for gathering consumers during the COVID-19 pandemic as it emerged in Australia in March, with people bracing for long periods of home isolation turning their minds to home projects and renovation jobs.

There was increased demand for Bunnings products as more customers spent time at home and required essential products for urgent home repairs, construction and maintenance, as well as home projects to occupy their time.

The key question for Mr Scott and the Bunnings team is whether the leap in sales in the second half of fiscal 2020 only served to bring forward revenues that will be absent later this year or next, as people across the country have largely completed the home projects and renovations that they planned to do.

“I think it is too early to tell. There has clearly been a trend of as people spend more time at home they spend more time at places like Officeworks and Bunnings, without question, but in some categories, such as paint, we wouldn’t expect to see a recurring level of growth that we have seen in paints.

“I think there are definitely positives for Bunnings but the outlook generally is really uncertain at the moment.’’