Monday, January 25

Bunnings’ On Track To Conquer DIY Retail In Next 10 Years: Analysts


Bunnings is on track to dominate the Australian market for the next 10 years, new research from stock analysts has found.

A report compiled by Morningstar Equity Research has predicted that the DIY retail giant will gain more market share and increase annual sales year-over-year as Australia’s obsession with property renovations and maintenance prospers.

By analyzing current and past sales, as well as competitors in the market, analysts concluded that Bunnings is on track to corner more than a quarter of the market.

Bunnings’ sales soared during the coronavirus pandemic. (Supplied)

“Bunnings is an exceptionally successful business and we expect it to continue to gain market share and improve profitability on sales, underpinning our wide moat at its parent company Wesfarmers,” the analysts wrote.

“Bunnings, Australia’s home improvement retail powerhouse, is by far the largest business in Wesfarmers’ existing portfolio today and the largest contributor to the conglomerate’s earnings growth over the next decade.”

As a subsidiary of parent company Wesfarmers, Bunnings is a huge revenue driver – in 2019-20 it generated a dazzling $ 15 billion revenue, dwarfing sister companies in Wesfarmers’ portfolio like Kmart ($ 9.2 billion revenue) and Officeworks ($ 2.8 billion).

Equity analysts predict a green future for the retail giant. (Ian Tuttle / Eye R8 Productions L)

However, Morningstar analysts said sales would slow comparatively after Bunnings soared during lockdowns imposed by the coronavirus.

“In the near term, we continue to expect weaker sales growth as Bunnings outpaces unusually strong sales growth induced by temporary changes in consumer spending patterns toward home improvement during COVID-19,” analysts wrote.

“We have lowered our forecast for short-term sales slightly due to a more cautious outlook on consumer price inflation and population growth.”

Six days ago, Wesfarmers told shareholders in a business update that during the pandemic sales grew by almost a third.

Designer Alice McCall in her Paddington boutique, photographed in 2014.

Victims of the Australian Retail Crisis

The next goal now is to improve Bunnings’ digital offering as consumers turn to options like click and collect and buy online.

“In the near term, we continue to expect weaker sales growth as Bunnings outpaces unusually strong sales growth induced by temporary shifts in consumer spending patterns towards home improvement during COVID-19,” Wesfarmers told shareholders.

“We have lowered our forecast for short-term sales slightly due to a more cautious outlook on consumer price inflation and population growth.”

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