Wesfarmers has seen a 3% increase in net profit after tax (NPAT) to $1.42 billion for the half year ended 31 December, 2023, supported by record earnings from Kmart Group and a solid performance from Bunnings and Officeworks.

Revenue remained relatively flat, inching up 0.5% to $22.67 billion, while earnings before interest and tax (EBIT) increased 1.6% to $2.19 billion during the half.

Wesfarmers managing director, Rob Scott said the retail divisions executed strongly, responding to changing customer needs as households increasingly sought out value.

“In this environment, the retail divisions’ core offer of everyday products with market-leading value credentials supported growth in sales and customer transaction numbers,” he said.

“The retail divisions have benefited from a proactive focus on productivity and efficiency initiatives in recent years, which together with their unique sourcing capabilities and strong supplier partnerships enabled them to mitigate ongoing cost pressures and provide compelling value for customers.”

Kmart Group delivered a record 26.5% increase in earnings and 5% increase in total sales growth attributed to Kmart’s lowest price positioning, improvements in the product offer and benefits from digitising operations.

RFID capabilities in Kmart stores were extended for more accurate inventory information and ongoing digitisation of sourcing and supply chain reduced lead times and costs, while improving availability.

The integration of Kmart and Target processes, systems and organisational structures to achieve one operating model across the two brands progressed in line with expectations. Enhanced Kmart and Target online platforms led to better delivery efficiency and overall customer experience.

Bunnings recorded total sales growth of 1.7% during the half and a 0.3% increase in earnings with continued commercial and consumer sales growth.

Expanded and new product ranges such as pets, cleaning and outdoor recreation performed well, promoting higher frequency visits and attracting new customers. Bunnings also experienced strong online growth with an expansion of its online range and marketplace.

Officeworks reported total sales growth of 1.8% with a 1.2% increase in earnings, supported by demand for stationery, art, education, Print & Create and technology. Online sales were strong with 34.7% penetration including Click & Collect and same day delivery to more postcodes than major marketplaces. Three new Officeworks stores were opened during the half.

Outlook

Despite elevated inflation and interest rates, Wesfarmers is confident that its retail businesses are well positioned in the current environment and for any improvements in consumer sentiment.

For the first five weeks of the second half of FY24, Kmart Group continued to deliver strong sales growth, Bunnings sales remained broadly in line with the first half results and Officeworks sales were in line with the prior corresponding period.