Bunnings has exited the UK as the group calls an end to the disastrous $1.4 billion acquisition.
The Australian hardware chain said on Friday that it plans to offload the chain of former Homebase stores for just one pound.
“The investment has been disappointing, with the problems arising from poor execution post-acquisition being compounded by a deterioration in the macro environment and retail sector in the UK,” said Rob Scott, the managing director of Wesfarmers.
“While it is important that we learn from this experience, this should not discourage our team from being bold and diligent in pursuing opportunities to create shareholder value.”
The parent company, Wesfarmers (ASX: WES), announced plans to sell the 240 Homebase stores and 24 pilot Bunnings outlets to the restructuring firm Hilco Capital.
Despite the $1.4 billion cost, investors have applauded the decision to leave and shares in the group rose 0.85 percent after the exit was announced.
The Perth-based group will record a loss of an estimated £200 million to £230 million in its full-year results from the exit.
“Overall it’s a pretty good result for Wesfarmers – albeit the end to a very poor acquisition,” said Hugh Dive, of Atlas Fund Management in Sydney.
“As sad though it seems, getting out for a ‘nominal amount’, ie one pound, is a good result. If they had simply shut it down the lease liabilities alone were in the range of $1.8 billion, though this would be offset by the sale of inventory.”
All of the UK Bunnings outlets based in the UK will be converted back to the Homebase stores under the new Hilco’s ownership.
