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"Difficult trading" for Homebase dents Bunnings' UK sales

Published: 25 October 2017 - Kiran Grewal

Australian retail giant, Wesfarmers Limited today announced its Q1 results for FY18, posting declines of 17.5% in its Bunnings proposition in the UK.

Bunnings UK & Ireland (BUKI) reported total sales of £276 million, down 17.5% (-13.8% in local currency terms), which the group attributed to the persistence of “difficult trading conditions” for the Homebase estate. Store-on-store sales fell 11.9% for the period.

The early trading performance of the first eight Bunnings Warehouse pilots was described as “encouraging”, with solid sales uplifts achieved across the pilot group.

The coming months will test performance in different seasonal conditions and Wesfarmers said it would continue to trial a range of formats, locations, and competitive environments to achieve proof of concept for its Bunnings Warehouse proposition.
 

Bunnings Group managing director Michael Schneider said that, while still early days, the engagement of customers, suppliers, team members, and local communities with the Bunnings stores remains pleasing.

 


Despite steady sales in core home improvement and garden categories, Homebase’s trading performance relative to the previous comparable period was adversely affected by the significant clearance of discontinued ranges last year.
 

Mr Schneider explained: “While the performance of Homebase is disappointing, we continue to be encouraged by the performance of the Bunnings pilots. The BUKI team remains focused on stabilising the performance of the Homebase stores as well as delivering proof of concept for the Bunnings format.".

There were 244 Homebase stores and eight Bunnings stores as at September 30, 2017. Coinciding with today's results, Bunnings opened its ninth pilot store, converting the former Homebase outlet in Worle. A total of 15 to 20 pilot stores are expected to be either trading or nearing completion by December 31 this year, subject to relevant approvals.

Meanwhile, Bunnings in Australia & New Zealand saw good growth during the quarter. Total sales were up 11.5% to $2,964million, with total store sales jumping 11.7%. Store-on-store growth was up 10.8%.

Strong sales growth was reported in both consumer and commercial markets during the period, within all trading regions and across all merchandising categories. The latest results built on total sales growth of 7.4% in the previous trading period, which was impacted by weather and the stock liquidation activities of the Masters business.

Bunnings continues to expand its portfolio in the regions, with a further 16 sites under construction at the end of September.

Source: Wesfarmers Ltd

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