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It is worth noting what Bunnings isn't doing in its first venture offshore.

 

- It isn't planning to go from a blank sheet of paper to a 150 store network within five years, which forced the Masters joint venture to embark on a frenetic scramble to acquire sites and construct new stores

 

- It isn't planning to invent an entirely new supply chain for a business category that Woolworths had no experience in and in a region that Lowe's was unfamiliar with.

 

- It isn't going to have to create a completely new brand and attract a completely new customer base, nor is it going to have to recruit a raft of new store managers and hire and train a completely new workforce.

 

- It isn't confronting the massive cash haemorrhaging that Woolworths and Lowe's experienced as they raced to try to gain the critical mass of mature stores that would generate the network benefits and cash flows that they needed to reduce the weight of funding the entire Masters business from their balance sheets and the cash flows from their other businesses.

 

What Bunnings bought for its $705m was an existing, established network of 265 stores focused within the Greater London region, the most prosperous part of the UK and one in which Homebase's home improvement rivals are under-represented. It bought an existing customer base, about $3bn of existing sales and about $40m of earnings before interest and tax. Homebase might be only modestly profitable but it is, unlike Masters, profitable and is an established and cash-generating business.

 

It also bought a renovation opportunity. Homebase's former owner, Home Retail Group (which itself has been acquired by Sainsbury's) struggled to generate any sales or earnings growth from the chain and so started stuffing its stores with concessions, including its Argos general merchandise brand and Habitat homewares brand. Bunnings has asked for those concessions to be removed. While it will lose around 20 per cent of the existing Homebase sales base, which was Bunnings' plan from before it bought the business. Shedding the low-margin concessions will open up significant space in its stores for traditional home improvement products..

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good call Mr B

 

For Coles' food and liquor stores, sales growth has slowed for the third consecutive quarter; same-store food and liquor sales rose 1.8 per cent in the three months ending September, well down on growth of 3.3 per cent in the June quarter and 3.6 per cent in the year-ago period
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Wesfarmers has reported a slowdown in growth at its core Bunnings and Coles operations, hampered by the liquidation sale at Woolworths' failed hardware operation Masters and strengthening competition in the grocery sector. The group's sales largely disappointed against market expectations, sending its shares down more than 3 per cent at the open.In its first quarter update, the WA-based conglomerate said headline food and liquor sales within its Coles arm climbed 2.9 per cent to $7.9 billion, while comparable sales were up a modest 1.8 per cent.

 

The closely-watched comparable sales number reveals a significant slowdown from recent growth rates of 4.9 per cent through the middle of fiscal 2016 and, most recently, 2.8 per cent in the June quarter. Analysts had anticipated same-store sales growth of 3 per cent.

 

Decelerating sales growth came despite an easing of deflationary pressure, which has significantly hampered the major supermarket operators over the past 12 months. Deflation through the September quarter was 1 per cent, an improvement from 2.4 per cent in the prior three months.

 

"In our food business, we have seen a change in market conditions over the past year," Coles managing director John Durkan said. "Market growth has slowed, while at the same time there has been an increase in competitive intensity. Despite these changes in market conditions, our focus on the customer will not waver."

 

Similar lacklustre numbers were seen at Bunnings in comparison to recent quarters, with total store sales growth of 7.3 per cent and comparable sales growth of 5.5 per cent. The numbers represent a cooling off from growth rates of 11 and 11.6 per cent over the prior two quarters as a fire sale at outgoing rival Masters hurt momentum.

 

The group warned the "disruption" from Masters would also weigh on its second quarter numbers. "Bunnings Australia and New Zealand achieved total sales growth of 7.4 per cent during the quarter, extending its very strong performance despite an impact from the stock liquidation activities of the Masters business," Wesfarmers managing director Richard Goyder said.

 

Bunnings' expansion into the UK through this year's purchase of Homebase continued to track to plan, Bunnings boss John Gillam said, with sales of $554m in line with expectations. "There is a strong focus within the business on continuing to transition core ranges across to home improvement and garden products," the company said. "Pleasing progress is being made with this work."

 

The biggest disappointment through a broadly uninspiring first quarter was again Target, with the discount department store booking a sharp 17.1 per cent drop in sales for the quarter to $643 million. Wesfarmers was forced to book an impairment of more than $1 billion on its Target unit in fiscal 2016, with momentum showing no signs of a turnaround in the near-term. The division reported a fall in comparable store sales of 21.9 per cent, a further deceleration from a 6.3 per cent retreat in the June quarter and 1.4 per cent growth in the March quarter.

 

"While early in Target's transition, and despite some progress being made on pricing, inventory and range rationalisation, poor underlying trade momentum proved challenging in the quarter," department stores boss Guy Russo said. "We are committed to converting Target to an EDLP (everyday low pricing) business and, at this early stage of the transition, improvements to product and ranges have not been sufficient to offset reduced promotional activity and investments made in price. "Target is making significant changes to its operating model which will take time to implement."

 

Kmart outperformed, although it too saw a drop-off in comparable store sales growth, with growth rates declining from 15.2 per cent to 9.6 per cent ahead of this quarter's 8.2 per cent sales gain. "Our commitment to deliver the lowest prices on everyday items continued to resonate well with customers, delivering growth in both transactions and basket size on the prior corresponding period," Kmart managing director Ian Bailey said. "We remain focused on improving the customer experience through further investment in the store network, with over half of all stores now in the renewed format."

 

The Officeworks business continued to track steadily, with sales rising 7.5 per cent to $461m. Officeworks recorded sales growth of 5.6 per cent and 8.9 per cent, respectively, over the prior two quarters. "Customers continue to respond favourably to our 'every channel' strategy which seeks to provide a unique one-stop experience across every channel ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ anywhere, anyhow, anytime," Officeworks managing director Mark Ward said.

 

Its fuel business endured another challenging quarter, with comparable fuel volumes down 10.7 per cent and comparable convenience store sales growth (excluding fuel) sliding to a growth rate of 3.2 per cent, from 3.8 per cent in the June quarter.

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Wesfarmers slid more than 5% yesterday, dragging the wider market sharply lower with it, after it revealed surprisingly weak September quarter sales figures for its Coles supermarkets chain.

 

Wesfarmers shares ended at $41.46, down 5.6% (its biggest fall since 2009) as investors ignored solid sales figures for Bunnings, Officeworks and Kmart, and focused on what was a sharp slowdown in sales growth momentum at Coles. The struggling target department store chain though again lagged, with a 17% slide in sales as it stopped selling toys.

 

ColesÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢ saw same-store food and liquor sales rise 1.8% in the three months ending September, well down on growth of 3.3% in the June quarter and 3.6% in the first quarter of 2015-16. Analysts put it down to the continuing battle for market share in the supermarket sector between Coles, Woolworths and Aldi.

 

....

Analysts say yesterdayÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s data confirms that like Woolies, ColesÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢ momentum is slowing significantly as AustraliaÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s second largest supermarket chain it cuts prices to defend its share against Woolworths and Aldi.

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if analysts knew that, why the heck WES rallied from 40ish to 45ish till yesterday?? :B):

so sad my shorts been stopped out not long ago :weirdsmiley:

 

 

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  • 3 weeks later...
Wesfarmers Ltd., the Australian retail-to-fertilizer conglomerate, has kicked off a sale process for its two coal mines in the country after prices for the commodity soared this year, according to people with knowledge of the matter.

 

The Perth-based company has sent preliminary information on the Curragh and Bengalla mines to potential buyers ahead of calling for bids, the people said, asking not to be identified as the details aren't public. Wesfarmers is working with UBS Group AG on the potential divestments, which may fetch as much as A$2 billion ($1.5 billion)...,

http://www.bloomberg.com/news/articles/201...-mines-ivj9n9m1

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and WES likely to announce the sale of its coal assets soon... they may get a better price than anticipated, and definitely much healthier than 6-12 months ago. the Rio sale done today will help:

 

Rio Tinto will sell its Hunter Valley coalmining arm Coal & Allied to Chinese powerhouse Yancoal for up to $US2.45 billion ($3.23bn). ... an upfront $US1.95bn payment and up to another $US500 million over the next five years, as well as potential royalties.

 

The Coal & Allied business includes Rio Tinto's interests in the Hunter Valley Operations mine, an 80 per cent stake in the Mount Thorley mine, a 55.6 per cent interest in the Warkworth mine, and a 36.5 per cent interest in a coal export terminal at Newcastle.

so, special dividend?

 

PS first branded Bunnings store opened in UK overnight.

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