B&Q, Homebase and the UK Hardware market

And so as Woolworths shuts down Masters, Wesfarmers has acquired Homebase in the UK to roll out Bunnings.  Kind of interesting that they both made their respective announcements on the same day.  Even more interesting that the announcements were made to the ASX only a few minutes apart.

Much has been written about Woolworths Masters disaster.  Less has been written about Wesfarmers foray into the UK however the commentary appears less negative than expected.  There have been the obvious comparisons with Masters. And of course the reminders of Australian companies struggling in overseas markets.  National Australia Bank finally de merged from Clydesdale Bank last week.

Wesfarmers has conceded that the acquisition increases the company's risk profile however provides an opportunity for long term value creation.  They hope it can achieve 18% return on capital within three to five years.

So what to make of all this.  When Woolworths rolled out Masters everyone was an expert and had an opinion as they perused the aisles.  Unless you've recently lived in the UK chances are you know next to nothing about Homebase and its main competitor, B&Q.

Enter Google.  This chart shows internet searches for "Homebase" and "B&Q"

Source: Google trends

There are easily double the number of people searching for "B&Q" online than there are searching for "Homebase."  Which is to be expected since B&Q has 39% of the home hardware market in the UK and Homebase has only 12% according to broker JPMorgan.   Interestingly B&Q has been trending up a little since 2011 (when they acquired 31 stores) where as Homebase's searches have been flat for the last ten years.  Once Wesfarmers has the keys to Homebase and have settled in we'll re-visit the graph and see what progress they are making.  And in time the key question will be...  Does the brand "Bunnings" have traction with the UK consumer?