Diversified conglomerate Wesfarmers became one of Australia's two biggest retail groups in 2007 following the takeover of leading grocery retailer Coles, which had just lost its long-held position as the local #1 to arch-rival Woolworths. That deal created an extensive retail portfolio in which Coles was partnered by a selection of other sizeable local brands, not least leading home improvement chain Bunnings, already owned by Wesfarmers. The acquisition was designed to call a halt to several years of steadily declining performance as Coles struggled to make sense of its sprawling retail operations. It also brought greater focus to Wesfarmers itself, originally a farmers' cooperative which had expanded into a wide variety of different sectors ranging from mining and chemicals to insurance and DIY. Yet problems continued to plague the group over the next few years. Perhaps the most damaging came from a ill-conceived attempt to transplant the successful Australian home improvement business into the UK with a deal to acquire local DIY chain Homebase in 2016 and rebrand it as Bunnings. That experiment proved disastrous, and Wesfarmers was forced to abandon the business after two years with losses of A$1.4bn. At least in part to replenish its financial resources, it announced it would spin off Coles and its other food and drink retail operations as a separate quoted entity. It retains a 15% shareholding in what is now Coles Group. Following the demerger, Bunnings became the biggest business within Wesfarmers, with around 375 stores in Australia and New Zealand and revenues of A$15bn. It is unquestionably the country's biggest home improvement retailer, as well as one of Australia's most trusted brands. The group continues to own general retailers Kmart and Target (which bear no relation to the US counterparts of the same name despite their similar branding), office supplies store Officeworks, and a collection of industrial manufacturers specialising in fertilisers, chemicals and mining. In 2020, the group began rebranding outlets of Target as Kmart. By early 2021, there were 313 outlets of Kmart and only around 150 remaining Target. Catch is the group's online marketplace selling its own or resellers' merchandise. Combined revenues were A$9.2bn with a further $2.8bn from Officeworks. The group also shares ownership with Coles Group of rewards points operator Flybuys. Combined revenues for year ending Jun 2020 were A$30.8bn (compared to A$66.9bn for the final full year with Coles). Net profit was A$1.7bn. Rob Scott is group managing director.
Capsule checked 4th May 2021
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Adbrands Weekly Update 21st Jan 2016: Australian conglomerate Wesfarmers confirmed the acquisition of UK-based DIY and gardening chain Homebase for £340m. It will become a local partner to the group's Australian business Bunnings, the leading Ozzie home improvement chain. Wesfarmers is expected to phase out the Homebase name in favour of the Bunnings brand. The announcement coincided with related news from Wesfarmers' domestic rival Woolworths, which said it is pulling the plug on its own struggling DIY chain Masters, a joint venture with America's Lowe's. The sale of Homebase also significantly boosts Sainsbury's chances in its pursuit of Homebase's sister chain within Home Retail Group, Argos.
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