Wesfarmers hires former Masters boss to help Bunnings’ UK venture

Wesfarmers has recruited the former head of Woolies’ failed Masters chain to aid its UK hardware venture.

Matt Tyson, centre, with NSW Premier Mike Baird, turns the first sod at a Masters store in Sydney in 2014.

Wesfarmers has made a shock appointment of a former Woolworths executive as it looks to gain a foothold in the UK home improvement market with Bunnings’ takeover of Homebase.

At an investor strategy day in Sydney today, Bunnings boss John Gillam detailed a three-man advisory team to guide its UK growth, headed by Archie Norman, who is known as the “turnaround king” for his roles at UK grocery chain Asda and input into the Coles recovery post-2007.

Mr Norman will be joined by Michael Mire and Matt Tyson, with the former a McKinsey & Company partner and the latter the former head of Masters, Woolworths’ botched Australian hardware foray.

“We’ve drafted in a lot of powerful people to help us get things right,” Mr Gillam said.

The decision to request assistance from Mr Tyson promises to raise eyebrows, as just two years ago he was looking to orchestrate a challenge to Bunnings’ Australian dominance on behalf of Wesfarmers’ fiercest rival.

He stepped down in February this year and headed back to the UK, but was last reported to be consulting Woolworths on its exit strategy.

While the appointment may surprise some, Mr Tyson is very comfortable in the UK, having spent 20 years at Europe’s largest home improvement retailer Kingfisher before being tapped by Woolworths in 2014 as it made a desperate bid to turn around the fortunes of the fledgling Masters operation.

Mr Gillam admitted the appointment of Mr Tyson was an “interesting choice”, but said his employment history showed he would be a valuable addition.

“He knows Bunnings well (and) he is also a very well-credentialed UK retailer,” he said.

“It’s terrific to have him.”

The third member of the advisory team — Mr Mire — is a senior adviser to Lazard, which counselled Wesfarmers (WES) on its UK entry. He spent 20 years at consultancy firm McKinsey, a company Mr Norman worked for before his Asda appointment.

“(He’s) a really strong thinker and brings some real discipline,” Mr Gillam said.

The investor strategy day also offered Bunnings’ Mr Gillam the opportunity to defend the group’s $650 million-plus purchase of UK-based Homebase earlier this year, after Bank of America Merrill Lynch analyst David Errington recently questioned the strategy.

“Four months post completion, the acquisition thinking (has been) validated,” he said.

“(We) confirm the financial guidance provided at acquisition announcement.”

The firm plans an investment of around $1 billion to develop a strong position in the market, while guidance from Wesfarmers boss Richard Goyder has previously pointed to an aim for return on capital of 18 per cent within five years.

Mr Gillam added the turnaround of Homebase was now “underway” after a “decade of poor management”, with plans to trial its Bunnings Warehouse setup in pilot stores later this year.

Should the trial not achieve the desired results, Wesfarmers will not push forward with the planned $1bn capital outlay.

“Successful pilots are an absolute precursor to further investment,” he said.