Strong growth in Australia, big downturn in the UK

Strong growth in Australia and New Zealand, a spiralling decline in Great Britain and Ireland: this is the picture presented by the Bunnings half-year report (covering July to December 2017) released by parent company Wesfarmers. Between July and December, Bunnings' total store sales in Australia and New Zealand increased by 10.1 per cent, with store-on-store sales increasing by 9.0 per cent. Operating revenue totalled AUD 6.566 bn. During the six months under review, 11 trading locations were opened, including eight new Bunnings Warehouse stores, two smaller-format stores and one trade centre. At the end of the period, there were 253 warehouses, 77 smaller-format stores and 33 trade centres in the Bunnings network. A completely different picture emerges in Great Britain and Ireland, where the Australian company operates the Homebase stores it acquired alongside its Bunnings pilot stores. Here total sales decreased by 15.5 per cent, with store-on-store sales declining by 13.4 per cent. For the second quarter, total sales declined by 16.7 per cent and store-on-store sales declined by 15.1 per cent. Operating revenue in the first six months amounted to GBP 517 mio, a decline of 15.5 per cent (-15.7 per cent to AUD 875 mio). The loss before interest and tax increased to GBP 97 mio (AUD 165 mio). The half-year report states that a significant clearance of discontinued ranges in the prior year was a problem. "Price investments and sales from new ranges did not offset the significant loss of sales that resulted from the exit of non-core ranges and concessions due to inconsistent store standards and poor execution," reads the report. The early sales results of the 15 Bunnings pilot stores were "encouraging", although "the sales uplifts achieved moderated during the winter months". The company closed five stores in the six months covered. Three of the eleven pilot stores opened during the half year were in new sites and are considerably larger than the stores that were closed, according to Bunnings. There were 234 Homebase stores and 15 Bunnings stores as at 31 December 2017, with a further four stores closed for conversion. A further nine pilot stores are expected to open by the end of June.