With almost 25 per cent of trading days lost due to government mandated store closures, Kmart and Target have reduced trading hours while tackling stock shortages.
In an ASX trading announcement on Monday, Wesfarmers mentioned that customer traffic in stores declined due to rising Covid cases in some states, while higher levels of staff shortages due to Covid in New South Wales and Victoria has also impacted the retailer’s ability to deliver stock to stores in demand.
With more team members having to isolate due to Covid, the retailer expects additional pressure on their distribution centres and stores in some states to require a reduction in trading hours – impacting stock availability and supply chain productivity.
“As a result of increasing cases of the Covid-19 Omicron variant in some states, retail trading conditions weakened in the last two weeks of the 2021 calendar year, and customer traffic to stores has remained subdued during the first half of January”, the business said.
Although supply chain disruptions were well managed due to investments in additional inventory, Wesfarmers expects Kmart Group to record between $170 and $180 million for the second half of the year.
Sales projections for the second half are expected to be poor since combined sales of Kmart and Target have recorded a 10.3 per cent decline in the past six months.
The shift to online channels during lockdowns also impacted profitability during the period, with fewer customers comfortable shopping at stores in person.
Online sales traffic of both Kmart and Target were up by 44.2 per cent than the prior corresponding year.