Homebase clear-out was vital: Richard Goyder

Wesfarmers CEO Richard Goyder has defended Bunnings culling executives at British hardware business Homebase.

Richard Goyder, chief executive of Wesfarmers. Picture: David Geraghty

Wesfarmers chief executive Richard Goyder has defended Bunnings culling the entire top level of executives at its newly acquired British hardware business Homebase, arguing the clear-out was necessary to turn the struggling British retailer into a world-class operator.

Mr Goyder also questioned why some of the axed Homebase senior executives — such as marketing director Chris McDonough, who only joined the business in December — were hired by Homebase parent Home Retail Group when it was in sale discussions with Wesfarmers.

“My expectations are that we will get in there, take control of the business and give the people in the business the best opportunity to grow and prosper in that business. We did it in Coles, Kmart, and that requires people to be moved,” Mr Goyder told The Australian.

Perth-based Wesfarmers bought Homebase earlier this year for $705 million, securing a foothold in Britain’s £38 billion ($72bn) hardware and home ­improvement sector through the chain’s 265 stores.

More than $1bn will be invested in the struggling Homebase to transform and revitalise its business, which will be renamed Bunnings. As part of that restructure, Wesfarmers this month ejected the senior managers of the business, including its recently appointed chief executive Echo Lu as well as Homebase’s finance director, commercial director, head of retail operations and marketing director. The clean-out of the executives drew criticism in Britain. Home Retail Group chief executive John Walden said: “You would not expect me to be thrilled about that.’’

But Mr Goyder has argued a new management team at Homebase, led by former Bunnings chief operating officer Peter Davis and fellow Bunnings executive Rodney Boys, was necessary to arrest its lacklustre earnings performance.

“When you go and invest £340m of shareholders’ money, you have to have a plan,” Mr Goyder said.

“Part of that plan was that Peter Davis would go and run the business, and we were clear on that from day one.

“The other part of the plan was we would take a handful of people from Bunnings — which I think is a world-class business — into a business that frankly isn’t world-class at the moment, and that we want it to become world-class.”

One of the exiting Homebase executives, Mr McDonough, a former marketing chief at British supermarket chain Asda, had only joined Homebase in December — a time when Home Retail Group was engaged in sale discussions with Wesfarmers, the owners of Bunnings.

“Some of those people were recruited within recent months, at the time that Home Retail Group was talking to us — so I think there is another question there.”

Wesfarmers faces an immense challenge rescuing Homebase after its latest trading results showed worsening comparable store sales and shrinking margins over Christmas and the new year.

Like-for-like sales growth across the Homebase network softened to 3.3 per cent during the final two months of 2015-16, down sharply from 4.5 per cent growth in the second half and a full-year sales growth of 5.2 per cent.