By Claire Reilly
Wesfarmers announced its half-yearly results today, speaking about the strong performance of its retail division, despite the difficult market conditions.
The company – which owns Coles, Bunnings, Officeworks, Kmart and Target – reported an increase in earnings across its entire retail division of $113 million for the first half of the 2011-2012 financial year, up to $1.56 billion.
“Continuing improvements in the turnaround retail businesses of Coles, Kmart and Officeworks were evident,” said Wesfarmers managing director, Richard Goyder.
“These businesses reported strong increases in customer numbers and unit volumes sold, as well as further gains in operating efficiencies, reflecting in combined earnings growth of 13.4 per cent for these businesses.
“The increase in earnings was strong given consumer sentiment remained subdued and high levels of discounting continued across the sector.”
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In Wesfarmers’ Words
"Bunnings continued to make good progress with its strategic agenda, in particular, improving service and value for its customers, which was underpinned by its range reset program, as well as category and network expansion. Earnings were supported by solid sales growth from both consumer and commercial segments and ongoing cost management initiatives.
"Despite heavy price deflation in technology and furniture categories, Officeworks generated earnings of $34 million, up 9.1 per cent. Growth in earnings was supported by another period of double digit customer transaction growth. The business continues to make good progress on improving the customer offer, including website enhancements, improved merchandising and investment in service. Progress was also made…to lower the cost of doing business.
"Target’s earnings declined to $186 million, as lower customer transactions and a high level of promotional activity across the sector affected margins, particularly in electrical and entertainment products. December’s results did show some improvement as changes were made to Target’s promotional program. Inventory was well managed during the half through proactive clearance activity.
"Kmart delivered a strong result with earnings up 12.6 per cent to $197 million for the half. Growth in margins was supported by better sourcing, pricing disciplines and stock management, as well as solid growth in customer transactions and volumes sold. Inventory levels were well managed throughout the half and at balance date inventory on hand was below the same time last year."