Bunnings UK, a division of Australian hardware titan Bunnings, which is owned by Wesfarmers Ltd (ASX: WES), today announced that it would take A$795 million in write-downs on its Bunnings UK & Ireland (BUKI) business.
Bunnings expanded into this region in 2016 with the acquisition of Homebase, a struggling hardware store.
Today, Wesfarmers announced that it would take massive write-downs on the value of its BUKI business due to continued poor performance. Bunnings UK will take a A$795 million write-down on the Homebase brand name, and goodwill attributed with the acquisition.
This is a ‘non-cash’ accounting adjustment that basically means Bunnings UK believes the business is worth $795 million less than it was at the time of the purchase.
BUKI is also taking a A$66 million hit on stock write-downs relating to excess and unsuitable stock, plus a further A$70 million in store closure provisions. While most of today’s losses are non-cash, the Bunnings UK & Ireland business is also expected to report cash losses of A$165 million before interest and tax, reflecting poor business performance.
Wesfarmers is expected to release its half-year results to the market on the 21st of February.
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