Company Interview / Stealth Group takes on Bunnings

Key Points:

Stealth Group (ASX:SGI) acquires Hardware and Building Traders for $22 millionCombined group targets $1.3 billion in annual sales and major industry scaleAmbition to be number two in hardware and number one in industrial supplies behind BunningsGrowth aims include sales surpassing $500 million, with EBITDA and net profit margins targeted at 8-12% and 5-8% respectively

Stealth Group (ASX:SGI) has made a significant move in Australia’s hardware and industrial supply market by acquiring Hardware and Building Traders for $22 million. Mike Arnold outlines that Stealth Group’s network, previously encompassing 32 stores and $100 million in purchases, will now join forces with Hardware and Building Traders’ 1,165 member stores and $700 million purchasing volume. Together, Arnold states, this positions Stealth Group as the largest alternative to Wesfarmers (ASX:WES) and Metcash (ASX:MTS), with a combined $1.3 billion in retail sales and a supply network of approximately 1,300 outlets.

Arnold says that this acquisition is a “once in a generation opportunity” that reshapes the competitive landscape, especially in the fragmented hardware sector. He singles out the strategic ambition to become number two in hardware — just behind Bunnings, which is owned by Wesfarmers — and to achieve top position in the industrial supplies space within three years. Target financials include more than $500 million in sales, 8-12% EBITDA, and 5-8% net profit margins, leveraging proven international models.

Looking ahead, Arnold sees growth coming through organic measures, with acquisitions to remain on the radar where value can be added. He highlights strong funding stability, a healthy debt profile, and robust cash flows from the merger with Hardware and Building Traders.