Bunnings has become a key part of Wesfarmers' financial strength, generating over 60% of the company’s earnings. However, with the group’s stock recently trading at 31 times forecast earnings, down from 36 times earlier this year, investors are demanding faster profit gains. Analysts believe Bunnings must double its current annual growth forecast of 4% to support bullish stock price expectations close to $100 per share, compared with this week’s price around $81.
Despite these pressures, Bunnings' foundations remain strong. It has transformed significantly in the past decade. Since 2015, annual sales have more than doubled from $9.5 billion to $19.6 billion. Earnings have increased by 115% from $1.1 billion to $2.3 billion. Digital revenue, once negligible, now accounts for about 7%. The product range has also expanded beyond traditional hardware into home security, solar technology, gardening and pet supplies, establishing Bunnings as a wide-reaching retail destination.
Bunnings is further investing in solar energy, trialling its Zelora platform in Newcastle, with plans to expand to other states in the coming year. Using a hire-purchase model, customers can eventually own their solar panels after 10 years, making renewable energy more accessible. This forms part of a broader plan to transition from hardware retail to integrated home and lifestyle solutions. From its origins as a hardware store, Bunnings is now active in a home-living market estimated to be worth $110 billion.
The central question is whether Wesfarmers can maintain and grow this momentum. The company has avoided regulatory pressure by continually expanding its product range and offering greater value. However, its success remains closely linked to the housing market, and any downturn in buying or renovation activity could pose challenges. Still, Bunnings seems well-positioned to adapt further if it continues to prioritise customer experience and product relevance.
