This article is from the Australian Property Journal archive
CONGLOMERATE Wesfarmers recorded a jump in revenue of more than 18% on the back more shoppers heading to Kmart for their clothes and homewares as cost-of-living pressures bite.
Wesfarmers, which also owns Bunnings, Officeworks, and Target, recorded $43.6 billion in full-year revenue, driving profit growth of 4.8% to $2.465 billion.
Earnings growth was partially offset by a “significant” change in non-cash property revaluations recorded at the group level.
Kmart Group’s revenue increased 16.5% to $10.635 billion and earnings by 52.3% to a business-record $769 million.
“Sales results for Kmart reflected growth across all categories, as well as increases in both units sold and transaction volumes on the prior year. Pleasing sales growth continued in the second half as customers responded positively to Kmart’s lowest price positioning and good product availability,” said Wesfarmers managing director Rob Scott.
Following a boom period during COVID as locked-down Aussies turned to DIY projects, Bunnings still managed to record revenue growth of 4.4% to $18.539 billion and earnings growth of 1.2% to $2.23 billion, and also despite wet weather on the east coast.
Bunnings assets remain a particular favourite among investors, with hardware and large format retail outperforming over the past few years. A Bunnings warehouse in inner Melbourne sold last month for $65 million.
Also performing particularly well in the Wesfarmers stable over FY23 was Officeworks, which recorded revenue growth of 5.9% to $3.357 billion, while earnings of $200 million were 10.5% higher.
Scott said Officeworks’ sales growth reflected improved back-to-school trading, significant growth in business-to-business sales, and continued above-market growth in technology categories. Sales also benefitted from increased demand across stationery, art, office supplies and print and create.
Bunnings’ total store sales growth was 2.1% for the second half, with strong demand and activity from commercial customers partially offset by lower consumer sales.
“Compared to the prior corresponding half, consumers demonstrated more caution in making big-ticket purchases and commencing larger DIY projects,” it said.
Wesfarmers Health reported revenue of $5.312 billion and earnings of $45 million for the year. The health division’s revenue result was supported by strong growth in the pharmaceutical wholesale business, supported by net customer acquisition, along with elevated sales of COVID-19 anti-viral products. Chemist chain Priceline recorded solid sales results for the year, with growth across health and beauty categories, albeit with demand moderating in the second half.
Meanwhile, Wesfarmers’ chemicals, energy and fertilisers division delivered a record earnings result, with a 23.9% increase to $669 million, while revenue lifted 8.7% to $3.306 billion. The chemicals business continued to benefit from strong demand from Western Australian mining customers. Construction of the Mt Holland mine was completed during the period, while construction of the Kwinana refinery is underway.
Wesfarmers said the performance of its online retailer Catch was “disappointing”. Gross transaction value dropped 25.9% to $733 million and the platform reported a loss of $163 million for the year, impacted by changing customer demand, poor margin outcomes in the in-stock range and elevated supply chain costs.
