Wesfarmers wrote down its $700M Homebase buy by $930M in two years

Wesfarmers bought British hardware chain Homebase in 2016 for $700 million as then-CEO Richard Goyder's 'deep step' into the UK, promising the move was made with 'eyes wide open'. By February 2018 the group had written down its value by $930 million — more than the purchase price — after Bunnings UK & Ireland's first-half loss blew out from $48 million to $165 million. New CEO Rob Scott conceded that in hindsight Wesfarmers had 'tried to do too much, too quickly' and its planning and execution were 'clearly not good enough'.

The execution had meant taking over Homebase's 265 stores, opening several big-box Bunnings-style outlets, and committing another billion dollars over three to five years. Five loss-making stores had closed in six months and up to 40 more were in the firing line; the Telegraph counted 'nearly 2,000 Homebase jobs at risk'. BofA Merrill Lynch analyst David Errington told the results briefing that supplier, customer and staff morale had dived since the review announcement: 'the view is the business is on death row. Why wait for it to get worse?'

The cautionary tale sat across the street: Woolworths' Masters big-box venture had cost more than $3 billion before being snuffed out in 2016, and while Woolworths' management was consumed by that debacle, Wesfarmers built its dominance by sticking to Bunnings and Coles. Scott set a June deadline for the UK review, refusing an immediate kill-or-commit decision: 'It would be really easy as a new CEO to come in and wipe the slate clean, I don't think that is in the best interests of shareholders.'

A $930M write-down on a $700M purchase; up to 40 more Homebase stores in the firing line after five closures, with nearly 2,000 jobs at risk.

The UK rollout tried to reformat hundreds of stores to the Bunnings warehouse model on an Australian timeline.

The purchase price was justified by Bunnings' domestic momentum and the Coles turnaround, not by UK market evidence.

A billion-dollar commitment over three-to-five years meant losses were locked in before the model proved anything.

The public review froze the business: suppliers, staff and customers all assumed the worst for six months.

Converting 265 stores to your home format in two years is not expansion, it is surgery on a business that never agreed to the operation — 'too much, too quickly'.

Scott cut cash losses, trading performance and management strengthening were set as the priorities ahead of the June 2018 decision day, with the British spring trading season framed as the last test of whether the experiment could take root. The review's options ran from fixing BUKI to what the ABC called 'a humiliating retreat', after five store closures with up to 40 more pending.