Australian Home Improvement Sector Has Room For Competitor-Woolworths

The head of Australian supermarket group Woolworths (WOW.AU) ), Michael Luscombe, said Sunday international comparisons show the country's home improvement sector has room for another large competitor.

Woolworths announced last week an equity agreement with American chain Lowe's Companies (LOW) to develop 150 home improvement stores over 5 years, with the first set to open its doors in 2011.

Woolworths has made a takeover offer for Australia's third-largest hardware distributor Danks Holdings (DKS.AU). Danks has unanimously recommended the offer to its shareholders.

Luscombe said the U.S. home improvement market had one large hardware store for every 90,000 people, while in Australia, the ratio was one for every 230,000 people

"So there's a big gap there. There's a big opportunity for an alternative offer that just gives consumers a choice that they don't presently have," he told the Australian Broadcasting Corp's Inside Business program.

Luscombe said the stores would be different from those of the current dominant home improvement chain Bunnings (BWP.AU).

"The last thing we will do is just replicate what is already there," he said.

-By James Glynn, Dow Jones Newswires; 612-8272-4685; [e-mail]