Dark test for Bunnings

UK move a drag on Wesfarmers’ results

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

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.

Its update on a tougherthan-expected push into the £38 billion ($61 billion) British home improvement market came as Wesfarmers yesterday 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”.

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 yesterday.

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”.

Wesfarmers owns Coles, Bunnings, Kmart, Target, Officeworks

HE SAID IT We want to trade them through the dark months so we get a good 12 month view of the stores Outgoing Wesfarmers’ chief executive Richard Goyder says it is crucial to test the Bunnings UK model across a full season before a widespread roll-out

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.

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

Kmart sales rose 9 per cent to $1.36 billion, while Target sales slumped 6.4 per cent to $602 million.