Wesfarmers decides to pull out of UK Bunnings disaster
Wesfarmers has announced it is abandoning its disastrous attempt to expand its Bunnings Warehouse chain into the United Kingdom and Ireland.
The conglomerate said on Friday it will sell its British hardware business, including the Homebase chain it bought in 2016 and 24 pilot Bunnings stores it had opened in the country, to restructuring firm Hilco Capital.
Wesfarmers had hoped to replicate the success of its earnings powerhouse hardware chain in the UK and Ireland, but instead ran up heavy losses after misreading the market and alienating Homebase's existing customers.
The company paid $705 million for Homebase in 2016, but wrote down the value of the venture by $1 billion in February.
Wesfarmers managing director Rob Scott said a comprehensive review of Bunnings UK and Ireland concluded that the business was capable of returning profits over time, but a turnaround would require more cash to be ploughed into the business in the short term.
"The materiality of the opportunity and risks associated with a turnaround are not considered to justify the additional capital and management attention required from Bunnings and Wesfarmers," Mr Scott said.
“A divestment under the agreed terms is in the best interests of Wesfarmers’ shareholders and will support the ongoing reset and repositioning of the Homebase business."
More to come