Wesfarmers blame poor weather for further sales decline at Homebase

Wesfarmers blamed poor weather and the 'Beast from the East' for a further slump in sales at Homebase as it announced it's Third Quarter Retail Sales Update.

Total sales for the quarter were £211 million, a decrease of 13.5 per cent on the prior corresponding period, with like for like store sales down 15.4 per cent. For the financial year to date, total sales fell 14.7 per cent to £726 million, while like for like sales decreased 13.9 per cent.

Improved trading results in the early part of the quarter were offset by severe weather in March that significantly affected trading, particularly in the seasonal gardening and outdoor living categories.

Download the full trading release here.

Bunnings Group Managing Director Michael Schneider said satisfactory progress has been made in regards to the focused streams of work to improve performance in Homebase stores as well as in continuing to refine performance in the Bunnings stores. This has included greater focus on store standards, inventory controls, range management and improved promotional and digital initiatives.

“Retail execution standards lifted in Homebase in preparation for spring and stores are well-positioned for the arrival of the season,” Mr Schneider said. “Refinement of the Bunnings format is ongoing with recent conversions reflecting updated range plans.”

During the quarter, eight pilot stores were opened and seven stores closed (four for conversion, three permanently). There were 227 Homebase stores and 23 Bunnings stores as at 31 March 2018. 

Insight & Analysis - Steve Collinge

The period covered by Wesfarmers Q3 results, January to March 2018 is probably the worst quarter for home improvement and gardening sales for many, many years. For the business to have only experienced a like for like store sales decline of 15.4% compared to the Q2 decline at 13.4%, is actually not a bad performance. There will be many other home improvement and gardening retailers out there suffering from high single digit and even double digit sales declines during that period.

What you can't see in these results is the dramatic uplift in sales that has occurred since the weather improved in April. Following a particularly harsh winter and an awful Easter, the pent up consumer demand was released with avengeance and as Michael Schneider commented above the Homebase and Bunnings stores were and continue to be very well prepared for the season.

It's just disappointing that this turn in the weather and dramatic uplift in performance during April may have arrived too late to persuade Wesfarmers to stick with the UK and Ireland. When we look back in a few years time, we may conclude that it really was the Beast from the East that ended Wesfarmers first and probably last foray overseas.

Source: Steve Collinge, the Insight DIY Team & Wesfarmers press release.

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