Homebase struggles in Bunnings’ Q1 financials

Bunnings United Kingdom and Ireland (BUKI) total sales decreased 17.5% (13.8% in local currency) as difficult trading conditions persisted for Homebase in Q1 (the 13 week period to 45 September 2017).

Owner Wesfarmers had a “generally pleasing” overall sales performance across its businesses, with the continued strong performances of Bunnings Australia and New Zealand, Kmart and Officeworks.

Wesfarmers bought Homebase in 2016, and began its rollout of Bunnings Warehouse pilot stores this year. Eight pilot stores were trading during the quarter, delivering “early encouraging results”.

See our walkthrough of one of the first UK Bunnings Warehouses here.

Bunnings UK and Ireland prepares for winter test

Total sales for BUKI in Q1 were £276 million ($457 million), a decrease of 13.8% on the prior corresponding period. Store-on-store sales decreased 11.9 per cent.

The early trading performance of the first eight Bunnings Warehouse pilots is encouraging, Wesfarmers said, with solid sales uplifts achieved across the pilot group: “The coming months will test performance in different seasonal conditions and BUKI will continue to patiently trial a range of formats, locations, and competitive environments to achieve proof of concept.”

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.

Schneider said: “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 30 September 2017. A total of 15 to 20 pilot stores are expected to be either trading or nearing completion by 31 December 2017, subject to relevant approvals.

 

 

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