“The customer and community response to the new Bunnings branded stores has been pleasing and they are delivering good sales growth,” Mr Scott told Wesfarmer’s annual general meeting in Perth. “Losses are however expected to increase in the 2018 financial year as trading remains challenging for Homebase and as we progress the conversion from Homebase to Bunnings.” Mr Scott said the company would focus on improving BUKI’s management team, and would “be disciplined with how we invest further capital”.
In a research note released to clients on Thursday, Bank of America Merrill Lynch analyst David Errington said that BUKI was shackled by meeting financial returns and would struggle to improve its business without investment. Same-store sales at BUKI fell 12 per cent in the first quarter compared to the same period last year. At Coles, Wesfarmers’ biggest business, Mr Scott said cost savings would not outweigh spending on customer service improvements and falling grocery prices. “In the short term, margin pressures are expected to persist as investments in the customer offer are not expected to be fully offset by simplicity benefits,” he said. Same-store sales growth at Coles fell to the lowest rate in eight years last quarter, battered by price deflation and a resurgent competitor in Woolworths. The AGM marked the official handing over of managing director from Richard Goyder to Mr Scott. Mr Goyder, who is retiring after more than 12 years in the role, has been appointed chairman of the Australian Football League Commission and Woodside Petroleum, and to the board of Qantas. Mr Scott is Wesfarmer’s eighth CEO in 103 years and most recently ran the conglomerate’s industrials division.
Article Source – smh.com.au