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Wesfarmers reveals £28m pre-tax loss for Homebase

Published: 15 February 2017 - Jenny Wonnacott

Homebase's new parent group Wesfarmers has released figures for the six months ending December 31, 2016, revealing an operating revenue for Bunnings UK and Ireland of £612 million with a loss before tax and interest of £28 million.

The roll out of Bunnings across the UK has been timed precisely to have the business “as well-positioned as possible” for summer 2017
The roll out of Bunnings across the UK has been timed precisely to have the business “as well-positioned as possible” for summer 2017

It described the July to December trading period at Homebase – months five to ten post-acquisition – as “steady, despite significant disruption resulting from the extraction of Homebase from Home Retail Group and significant work to start repositioning the business.” Trading volumes were revealed to be “in line with the prior year, after adjusting for the store closures instigated by the previous owner and the exit of the Habitat and Argos ranges and other non-core home improvement ranges.”

Transactions at Homebase increased like-for-like by 9.1% and, with the adoption of the Bunnings 'Always Low Prices' mantra, a material price deflation was seen across the stores.

Bosses revealed, “Higher stock weights have supported wider assortments, with new ranges and key supply agreements secured to deliver a core home improvement and garden offer. Clearance activity for deleted lines is largely complete. Merchandising and operational changes in the Homebase business are well advanced, with kitchen, bathroom and flooring ranges to finalise in the second half of the financial year.

A significant amount of work was undertaken in the first half of the financial year in advance of the opening of the first Bunnings Warehouse store earlier this month. The selected site at St Albans in Hertfordshire ceased trading as a Homebase store in late November 2016, with construction works completed before the end of December 2016, followed by fit-out merchandising and operational plans to create the first Bunnings Warehouse.

The new store successfully commenced trading on Thursday, February 2, 2017. Merchandise and racking is in place to open other pilot stores in line with previously announced plans. All of the Homebase work, as well as the program for the pilot Bunnings Warehouse stores, has been timed with a view to having the overall business as well-positioned as possible for the important 2017 spring/summer trading period.”

Significant work is now underway to “transform systems and the supply chain” at Homebase/Bunnings, and “good progress” has been made with the transition, separation and integration activity.

Overall, the Wesfarmers group reported a net profit after tax of $1,577 million (around £970m) for its first half, up 13.2% on the previous half. Bunnings Australia and New Zealand saw earnings growth of 9.8% for the period. Managing director Richard Goyder said the results were “very strong” and “particularly pleasing.”

Source: Wesfarmers

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