Wesfarmers profit falls 58%

Hurt by Bunnings UK divestment.

Net profit after tax (NPAT) has slumped 58.3% for Wesfarmers in the year ended 30 June 2018 due to discontinued operations for Bunnings United Kingdom and Ireland (BUKI) and Curragh, totalling a loss of $1.4 million.

Wesfarmers described the 2018 financial year as one of ‘significant change’ with key priorities to address areas of underperformance, reposition the portfolio and drive opportunities for growth.

Retail earnings (from continuing operations and excluding significant items) increased 5.2% during the year with strong results from Bunnings Australia and New Zealand (BANZ), Department Stores and Officeworks.

Total store sales growth was 8.9% for BANZ with store-on-store sales up 7.8% with positive growth across consumer and commercial, all trading regions and merchandising categories. In FY18, an online transactional platform for special orders was launched to provide customers more convenient access to a wider choice of products. During the year, 10 new trading locations opened and there were further upgrades to the existing network.

EBIT for the Department Stores division increased 21.5% to $660 million – the highest earnings for the division under Wesfarmers’ ownership.

Kmart sales were up 8% and comparable sales increased 5.4%. There were 10 new stores opening, including one Target conversion, two stores were closed and 20 store refurbishments were completed in the year.

Target total sales were down 4.7% and comparable sales down 5.1%. Six previously committed new stores were opened and six stores were closed (including one conversion to Kmart) during the year. Target will continue to focus on advancing product fashionability and quality, accelerating its online proposition and optimising the store network.

EBIT was up 8.3% to $156 million for Officeworks, attributed to higher sales across stores and online, as well as effective management of gross margin and cost of doing business. New expanded product ranges, merchandise layout and store design changes, online enhancements and a relentless focus on price, range and service, were part of ongoing improvements in the year.

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