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Dulux strips paint from Woolies’ Masters

Woolworths Limited (ASX: WOW) has suffered a blow to its hardware business after Dulux announced that it was pulling its paint and woodcare products from the stores.

DuluxGroup (ASX: DLX) reported that it was withdrawing its premium paint and woodcare products, including Dulux and Cabot’s, from Woolies’ Masters and Danks corporate stores. The company said that it was in response to competitors increasing their alignment with particular resellers and obtaining greater support from those aligned resellers. In other words, Dulux wasn’t receiving the same deals as its mainly US-based paint competitors, so has canned its paint deal with Woolworths.

Dulux will instead follow the example set and align itself with its key retail paint channel partners, like Bunnings – owned by Wesfarmers Limited (ASX: WES) and Mitre 10 – owned by Metcash Limited (ASX: MTS).

DuluxGroup says the decision is not expected to have a material impact on its performance, with total paint sales to Masters and Danks representing around 1% of total revenues. Managing director Patrick Houlihan said, “Masters and Danks corporate stores remain a valued partner for DuluxGroup’s broader retail hardware business. They will continue to be offered our market leading Selleys and Yates brands, among others.”

In 2011, Bunnings stopped stocking paint from US giant Valspar, including leading Australian brand Wattyl, instead giving over more shelf space to products from rivals Dulux and Taubmans. Valspar is the major supplier of paint to Lowe’s hardware chain in the US, and also supplies paint to Masters in Australia.

For Woolworths, the decision is a blow to its hardware ambitions, with Dulux paints being the market leader.

Foolish takeaway

Woolworths may have snubbed one supplier too many, and Dulux wasn’t going to wear it. Consumers will be hoping the two can brush aside the issue and finish with Dulux paints back in Masters’ stores.

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