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Wesfarmers results jump as Bunnings, Kmart and Officeworks boom

Wesfarmers has joined in the parade of businesses reaping the rewards of a strong year of trade, despite ongoing movement restrictions, signaling a 40 per cent jump in net profit to $2.38 billion.

The conglomerate’s retail sector, made up of Bunnings, Kmart Group and Officeworks, delivered strong sales of $33.9 billion (up 10 per cent) over the last 12 months, according to managing director Rob Scott.

“While Covid-19 had a significant impact on operations during the year, the group’s businesses maintained their focus on building deep customer relations and trust,” Scott said.

“Customer demand remained resilient, [though] sales growth in Bunnings, Officeworks and Catch moderated from mid-March as the businesses began to cycle elevated demand following the onset of Covid-19 in the prior year.

“Pleasingly, sales growth from mid-March remained strong on a two-year basis across all of the Group’s retail businesses.”

According to Scott, digital engagement with the business’ brands increased throughout the year and, including sales on the Catch Marketplace, hit $3.3 billion.

Revenue at Bunnings increased 12.5 per cent over the course of FY21, reaching $16.8 billion, with Scott noting the business’ success was due to its resilient operating model and the ability to adapt to changing consumer needs.

Kmart Group, which operates Kmart, Target and Catch, saw revenue grow to $9.9 billion for the year.

“Kmart and Target earnings growth [of 69 per cent to $693 million] was driven by higher sales, lower clearance costs and an improvement in the cost of doing business as a result of planned network changes,” Scott said.

“This was partially offset by higher operational costs associated with online fulfilment and ongoing investment in technology in Kmart.”

Catch’s earnings were also impacted by investments in technology, marketing and fulfilment capabilities to support further growth. No such investments in Target were mentioned, though the planned changes in Target’s store network (that is, converting them to Kmart stores) saw trading results “exceed internal expectations”.

Likewise, Officeworks’ revenue jumped 8.7 per cent to $3 billion, while earnings increased to $212 million, supported by strong sales growth, but hampered by continued pressure on margins.

All businesses have seen sales tumble in the last seven weeks, however, as Sydney’s lockdown has spread across the country and caused retail restrictions to be reinstated.

“The impact of lockdowns and household and business confidence has become more acute as recent lockdowns have been extended and further widespread restrictions would negatively impact overall business activity and the group’s trading performance,” Wesfarmers said.

As such, the business said it would continue to support vaccination efforts, including among its own team members.

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