Wesfarmers plans to ‘renew’ its portfolio after profit slips

(Source: Bigstock)

Retail conglomerate Wesfarmers has reported a 1.2 per cent decline in tax-paid profit to $2.35 billion following significant pandemic-related disruptions to trading.

The retail wing of the group comprises Bunnings, Officeworks, and Kmart Group — which includes Kmart, Target and Catch.

For the period ended June 30, overall group sales increased 8.5 per cent to $36.8 billion while earnings before interest and tax fell 2.3 per cent to $3.6 billion.

Strong demand from commercial customers drove Bunnings’ revenue up 5.2 per cent to $17.7 billion. During the year, the business also expanded its range, store network and fulfilment capabilities to enhance customers’ shopping experience.

Kmart Group’s sales fell 39.7 per cent to $418 million largely due to Covid-related store closures in the first half, coupled with stock congestion at domestic ports and distribution centres.

Growth in its marketplace offering drove Catch’s gross transaction value (GTV) by 1.6 per cent to $989 million for the year.

Officeworks’ revenue increased 4.6 per cent to $3.16 billion, however higher fulfilment costs associated with lockdowns and temporary inefficiencies during its transition to a new customer fulfilment centre in Victoria impacted earnings.

Wesfarmers MD, Rob Scott, said the group will continue to invest in its business and “renew” its portfolio despite the disrupted trading environment.

For the first seven weeks of FY23, retail trading conditions for the business have remained “robust” despite the effects of inflation on household budgets.

The OnePass membership program — a digitally native subscription service — will be extended to its other retail businesses (Bunnings and Officeworks) in the next financial year.

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