Bunnings Positive

Bunnings’ latest results were once again in positive territory. Total sales for the second quarter of $2 billion were up 4.8% against the previous corresponding period. Total store sales for the second quarter grew 4.7%, while store-on-store growth was 2.4%.

For the first half of the 2011 financial year, total sales were up 4.4% to $3.5 billion and total store sales grew 4.1%. Commercial sales were 3.7 per cent higher than the previous corresponding period. The result included the continued deflationary impacts of the ‘value focus’ work underway, as well as adverse weather that affected trading conditions in many locations relative to the previous corresponding period. Growth was achieved in most Australian states and in New Zealand, across key product categories.

John Gillam, Managing Director, said significant work is continuing on enhancing the customer experience, network expansion and business improvement: “The business is in a good position to continue to deliver sales growth, with solid progress having been made in further strengthening our three strategic pillars of price, range and service.” Overall earnings were up 8.3% to $457 million. Management attributed the strong result to good merchandise execution, a strong focus on cost management and expansion of the store network. Eight warehouse stores, five smaller format stores and three trade centres were opened during the July to December 2010 period. At the end of the period there were 191 warehouses, 57 smaller format stores and 32 trade centres operating in the Bunnings network across Australia and New Zealand.

Network expansion will continue at the high end of the stated range of 10 to 14 warehouse stores, two to four smaller format Bunnings stores and four to eight trade centres per annum, with a strong property pipeline in place, resulting in increased capital expenditure for the full-year. Management proposed to sell and leaseback 13 Bunnings warehouse sites to the Bunnings Warehouse Property Trust (BWP). The transaction value is approximately $242 million and is likely to generate a profit on disposal of property in the order of $3 million. The sale is subject to BWP unit holder approval on 30 March 2011.