Homebase Owner Bunnings Posts a Loss Of $89 Million in The UK
Iconic Aussie hardware chain Bunnings, home of the Sunday snag, has not found as much success in the U.K. as it enjoys Down Under.
Profit from Australian and New Zealand stores increased 10 per cent to $1.33 billion over the last financial year, but recorded a dismal $89 million loss in the U.K. and Ireland.
The first Bunnings in the U.K. opened in February last year, with the sausage sizzle it's known for, and early indications were that the business was 'resonating well with customers'.
Bunnings is part of Wesfamers, which bought the DIY chain Homebase in 2016 for $700 million, but lost $90 million in the first year, according to Merrill Lynch analyst David Errington.
Five years before the acquisition, Wesfarmers was profitable, so 'something you’ve done going into this business is not right'.
But Wesfarmers finance director Terry Bowen hit back, saying that 'the quality of earnings... was non-sustainable' at the time Homebase was acquired.
'If you’re going to convert something into a long-term business, you’re going to pay a price,' he argued.
'It would be fair to say that was considered within the acquisition case.'
Bunnings Group managing director Michael Schneider said that trading performance was bound to be initially affected by 'transition, separation and integration activity'.