Some investors may be wondering if they are able to buy shares of Bunnings Warehouse on the ASX.
It's a good question. Although it's not an ASX share in itself, Bunnings is part of one of the largest retail businesses in Australia. Let's take a look.
How big is Bunnings?
Well, Bunnings boasts about being the leading retailer of home and lifestyle products for consumer and commercial customers in Australia and New Zealand. Its store network is made up of 282 large warehouse stores, 67 smaller format stores, and 32 trade centres and frame & truss sites.
But there's more to Bunnings than just Bunnings Warehouses.
It acquired South Australian retailer Adelaide Tools (which is now called Tool Kit Depot), which has 11 stores. Bunnings then acquired Beaumont Tiles in November 2021, which has 115 stores.
At the last count, the business had around 53,000 team members.
How to gain exposure to Bunnings Warehouse on the ASX
Bunnings is part of the retail conglomerate Wesfarmers Ltd (ASX: WES).
Wesfarmers has owned the business for almost 30 years, taking full ownership in 1994.
It's the crown jewel in Wesfarmers' portfolio.
In FY22, Bunnings generated $2.2 billion of earnings before tax (EBT), outperforming all other brands in the Wesfarmers stable. Kmart and Target made $505 million of EBT, Officeworks made $181 million of EBT, Wesfarmers chemicals, energy and fertilisers (WesCEF) made $540 million of EBT, and other small divisions contributed smaller amounts.
Bunnings made $17.75 billion of revenue in FY22, which was an increase of 5.2%.
I think one of the most impressive things about Bunnings is its return on capital (ROC), which was 77.2% in FY22. That says that the business makes a lot of profit on the money invested in it.
What's the outlook?
In Wesfarmers' outlook comments about Bunnings, the company said:
Bunnings continues to be well positioned for a range of market conditions, and will benefit from the diversity of its business, focus on necessity products and strength of its offer across consumer DIY and commercial markets. The demand outlook across consumer and commercial is supported by a solid pipeline of renovation and building activity, as well as incremental DIY growth opportunities as customers continue to focus on maintaining and improving their homes.
Bunnings remains focused on driving long-term growth by building more connected experiences across all channels, deepening its relationship with commercial customers, and evolving its supply chain to support the continued growth of the business.
Another option: Invest in the buildings
Owning Wesfarmers shares is the way to gain access to the operating business.
However, there is an ASX property share that owns many of the warehouses that Bunnings operates from.
BWP Trust (ASX: BWP) is the name – it's a real estate investment trust (REIT) that claims to be the largest owner of Bunnings Warehouse sites in Australia, with a portfolio of 65 stores. Seven of the properties have adjacent retail showrooms that the BWP owns and are leased to other tenants, according to the REIT.
At 30 June 2022, the portfolio had a value of $3 billion, generating $153.3 million of annual rent. The occupancy rate across its entire property was 97.5% due to three vacant properties. BWP's portfolio had a portfolio weighted average lease expiry (WALE) of 3.9 years.
In my opinion, Wesfarmers shares are the better way to gain direct exposure to Bunnings and its success, particularly if it sells more things online. But, the BWP Trust is an interesting alternative investment.
