Wesfarmers profit to be hit by struggling UK Bunnings venture
In news reminiscent of Woolworths’ Masters home improvement venture, Wesfarmers has reported it will be writing down the value of its UK and Ireland Bunnings investment by almost AUD $1 billion in its first half 2018 financial year results.
Wesfarmers, parent company of Coles supermarkets, first entered the UK and Ireland home improvement sector in 2016 when it acquired the region’s Homebase network for AUD $705 million.
Despite initial intentions of turning the stores into Bunnings, hoping they will become successful as Australian Bunnings stores, Wesfarmers is now reviewing the investment after announcing the near billion dollar write down this week.
Wesfarmers Managing Director, Rob Scott said The Homebase acquisition has been below expectations, something he said “is obviously disappointing”.
“In light of this, a review of Bunnings United Kingdom and Ireland has commenced to identify the actions required to improve shareholders,” Scott said.
According to Scott, there will now be a disciplined approach to any further capital expenditure on the venture and the market will be updated by June 2018 on plans regarding converting existing Homebase stores to Bunnings stores.
Managing Director of Bunnings UK and Ireland to retire
The write down news comes at the same time Wesfarmers has decided to announce its Managing Director of Bunnings UK and Ireland, Peter (PJ) Davis is retiring.
Davis has worked within the Bunnings network for 25 years, helping establish the chain in Australia in the 1990s.
Davis will be replaced by Damin McGloughlin, who has more than 30 years’ experience in the UK home improvement and DIY market.
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