Huge growth at Kmart and Target

Wesfarmers Limited has just released its half yearly results for the period ending 31 December 2009. Kmart and Target demonstrated the biggest improvement in the company’s retail sector with EBIT increasing 105.3 per cent and 29.8 per cent respectively.

Across all of its retail businesses, Wesfarmers reported a strong earnings increase of 22.6 per cent compared to the previous corresponding period.

Kmart was evidently the most improved retailer over the period, with EBIT more than doubling the previous corresponding year, with an increase of 105.3 per cent.

According to Wesfarmers, this strong result was due to higher margins, improved category management and promotional strategy, benefits from supply chain restructuring and tight cost control.

Total sales for the period decreased by 1.0 per cent with comparable store sales declining 1.6 per cent for the period and 1.1 per cent for the second quarter. This was reasoned on unprofitable product lines and resetting its customer offering.

In terms of Target, the retailer delivered an EBIT result of $279 million, which was up 29.8 per cent. This was attributed to good merchandise planning, a favourable sales mix and tight cost control.

Total sales for the period increased 4.2 per cent with comparable store sales growth of 1.7 per cent for the period and 1.6 per cent for the second quarter.

The Coles division (supermarkets, liquor, fuel and convenience) also delivered a positive result with EBIT growth of 12.8 per cent to $486 million. Not to mention Bunnings and Officeworks, which recorded EBIT increases of 14.1 per cent and 9.0 per cent respectively.

“The Group is optimistic about the future performance of its retail businesses as customer offers and operations continue to improve, but it remains cautious of the Australian retail environment in the second half as retailers trade without the assistance of the prior year government stimulus and face potential impacts on consumer confidence and spending as a result of any further interest rate rises,” said the company in a statement.

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