‘Everyday low prices’ a win for Kmart, Bunnings owner
Australian consumers continue to flock to Kmart and Bunnings, giving owners a boost in sales and profits.
Wesfarmers, which also owns the popular Priceline pharmacy network and Officeworks, reported first-half net profit rose 9.3 percent to $1.6 billion.
The profit news, which was slightly above expectations, came after sales increased by 3.1 percent in the six months ending in December, reaching $24.5 billion.
Wesfarmers chief executive Rob Scott said the better performance, despite challenging market conditions, was supported by earnings contributions from Bunnings, Kmart (including Target) and fertilizers, chemicals and energy arm WesCEF.
“Despite a modest improvement in consumer demand, high costs continued to burden many households and businesses,” he said in a statement on Thursday.
“The divisions performed well and increased productivity to reduce cost pressure and keep prices lower for consumers.”
Mr Scott said the “everyday low prices” model pioneered by Bunnings and Kmart continued to support sales and earnings.
Bunnings saw higher sales across all its products, while Kmart also reaped the benefits of the popularity of its in-house Anko range.
“Sales across the Kmart group’s brands saw (a) relatively stronger performance at Kmart, which was partially offset by Target, which was impacted by challenging trading conditions in ready-to-wear, particularly in seasonal categories,” Mr Scott said.
Wesfarmers said its retail divisions continued to trade well in the first six weeks of the second half of this financial year.
But he noted that the start of a new, higher interest rate cycle this month and the uncertain outlook for inflation are impacting consumer confidence.
The Perth-based group said its interim dividend was $1.02, down from 95 cents a year ago.
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