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Bunnings' price promise will not apply to Masters fire-sale prices

Catie Low

Bargain hunters be warned, Bunnings has no plans to undercut fire-sale prices at Masters as the stock liquidation gathers pace.

It's understood Bunnings has informed both the Australian Competition and Consumer Commission as well as the state-based consumer affairs authorities that it won't extend its "if you happen to find a lower price on a stocked item, we'll beat it by 10 per cent"  promise to undercut fire-sale prices at failed competitor Masters.

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Bunnings appears to be taking action to get ahead of any customer complaints as it braces for the financial impact of what could be a three-and-a-half-month closing down sale at the Masters Home Improvement stores.

The two competing large-format chains stock slightly different ranges but Wesfarmers has already warned Bunnings could face some "short term volatility of trading margins" as a result of the Masters wind-up.

Bunnings will not be drawn into a race to the bottom as the Masters liquidation gathers pace.
Bunnings will not be drawn into a race to the bottom as the Masters liquidation gathers pace. Photo: supplied

Bunnings' price guarantee has never applied to stock liquidations and sources close to Bunnings said there were concerns that cutting prices to below cost, just to beat Masters discounts could put the dominant chain in breach of consumer law.

"It may be unlawful and it is not responsible for us to price match or beat stock liquidation prices where large volumes of stock are sold below cost," a spokesperson for Bunnings said.

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"We believe this undermines our focus in delivering long-term value for customers and may damage competition in the industry as a whole."

One source close to Bunnings said the chain had been very careful to communicate how it planned to handle the Masters liquidation and how it would share this with customers.

It's not clear how long GA Australia, which Woolworths has appointed to manage the sell-down of Masters inventory will run the closing-down sale but Woolworths has announced the chain will shut down by December 11 at the latest.

There is a lot of speculation over exactly how much stock there is in Masters, with hardware insiders reporting there is inventory in the stores, distribution centres as well as "on the water" in containers that haven't arrived in Australia yet.

The Masters closing-down sale is going ahead despite a legal stoush between Woolworths and Masters'  part-owner, US giant Lowe's, which is agitating for the appointment of a liquidator to run an "equitable wind up" of the hardware joint venture, Hydrox Holdings.

Lowe's claimed  in the Federal Court this week that Woolworths had "no legal authority" to negotiate the $750 million deal  to sell the Masters properties to the Home Consortium.

Backed by the families behind Aurrum​ Group, Spotlight Group and Chemist Warehouse, the Home Consortium deal was unveiled as part of a $1.5 billion deal trifecta announced a day before the release of Woolworths full-year results last week.

Sources close to Woolworths claims Lowe's last-minute legal action is all about extracting a larger price for its 33 per cent stake in Hydrox however it's understood Lowe's has concerns about the "transparency" of the sale process run by Citi.

It's an unwanted distraction for Woolworths as it battles to turn around its supermarket business and Lowe's legal action has also cast doubt over whether Woolies will net any return from the sale of Masters and the profitable Home Timber & Hardware chain.

Woolworths is pushing for the appointment of an independent arbiter to settle the dispute, as set out in the joint venture agreement, which it's understood to have terminated last week on the same day it announced the three deals to exit hardware.

Negotiations are believed to have broken down over the independent valuation of Lowe's stake and insiders suggest Woolworths was not prepared to be "held to ransom" incurring further losses while Lowe's "stone-walled."

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