Feb 5, 2018
Wesfarmers reviewing future of its UK DIY business
Wesfarmers said it is reviewing the future of its UK DIY business, after revealing a A$1bn writedown related to the Australian group's high-profile acquisition of British retailer Homebase in 2016. The admission is a blow to the international expansion of the Australian retail-to-resources conglomerate, a strategy that hinges on Wesfarmers rolling out its Bunnings DIY brand across Homebase's 250 stores in the UK and Ireland. Rob Scott, Wesfarmers managing director, said it was not his preferred option to pull the plug on the UK DIY business, noting that two years ago it had been trading profitably. Citi said in a note that the risk of Wesfarmers exiting the UK was rising, and something the market was likely to begin pricing in under a new Wesfarmers senior management team "Which is keeping all options on the table". Wesfarmers has rebranded 19 Homebase stores as Bunnings at a cost of £50m. Any decision to close Homebase would be costly for Wesfarmers, which has £1bn in outstanding lease liabilities in the UK. Wesfarmers also said it is taking a A$306m pre-tax impairment related to its struggling Target retail chain in Australia.
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