Wesfarmers profits dive 58% after Homebase sale

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Wesfarmers full-year profits have more than halved after taking a $1.3 billion (£1.02 billion) hit in costs and losses from its failed takeover of Homebase.

The Australian retail giant saw net profits for the full year to June 30 drop 58 per cent to $1.2 billion (£940 million), down from $2.87 billion (£2.26 billion) a year prior.

After purchasing Homebase in 2016 in an attempt to use it as a springboard into the UK market by gradually converting it into its Bunnings fascia, it subsequently made hundreds of millions in losses and was forced to sell it in May at a $375 million (£295 million) loss.

The collapsed business, which it sold to Hilco Capital for £1, reportedly cost Wesfarmers $1.02 billion in impairments, write-offs and store closure provisions.

Homebase has since announced plans to launch a CVA, seeing 42 stores close and around 1500 jobs threatened.

Wesfarmers Australian retail firm department store Target also underperformed, seeing comparable sales drop five per cent enduring yet another $300 million (£236 million) write-down.

Overall Wesfarmers retail operations did increase 5.2 per cent, thanks to a better performance from Officeworks and its Bunnings operations in Australia and New Zealand.

Outside of the UK Bunnings saw pre-tax earnings jump 12 per cent to $1.5 billion (£1.18 billion), but its supermarket chain Coles saw earnings drop 6.8 per cent to $1.5 billion (£1.18 billion).

Despite the significant write-downs from its failed venture, the conglomerate expected “continued earnings growth” across its retail operations.

This has sent its share price jumping 4.19 per cent, following a gradual upward trajectory since selling Homebase in May.

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