Wesfarmers has posted net profit after tax (NPAT) of $2.4 billion for the year ended 30 June 2023, an increase of 4.8% on the prior year, with the Kmart Group seeing revenue increase 16.5% to $10.6 billion year-on-year. Officeworks recorded revenue growth of 5.9% while Bunnings saw revenue increase 4.4%.
Kmart Group’s earnings were 52.3% above the prior year to reach $769 million – a record for the business, reflecting strong underlying trading performance and execution of pricing strategies, as well as the normalisation of trading conditions following Covid restrictions in the prior year.
Sales results for Kmart reflected growth across all categories, as well as increases in units sold and transaction volumes on the prior year, with consumers responding positively to Kmart’s lowest price positioning and good product availability.
Target’s trading performance was in line with the prior year, but second half performance was variable across categories with relatively stronger performance in apparel compared with challenging conditions in home and toys.
Officeworks reported $200 million in earnings, up 10.5% on the prior year. Sales growth reflected improved back-to-school trading, significant growth in business-to-business sales and above-market growth in technology categories. Sales also benefitted from increased demand across stationery, art, office supplies and print & create.
Officeworks continued to invest to modernise its supply chain including completing the transition to a new Victorian import distribution centre and progressing the development of a new customer fulfilment centre in Western Australia.
Bunnings experienced sales growth in both consumer and commercial customer segments and across all trading regions, despite prolonged wet weather on spring trading on the east coast during the first half.
Robust consumer demand continued for necessity products that support home repairs and maintenance, and smaller scale DIY home improved projects. Compared to the prior corresponding half, consumers demonstrated more caution in making big-ticket purchases and commencing larger DIY projects.
Catch’s gross transaction value (GTV) declined 25.9% to $733 million during the year, reporting a loss of $163 million for the period, including restructuring costs of $40 million relating to inventory, team redundancies and asset write-offs.
Catch’s performance was impacted by changing customer demand, poor margin and elevated supply chain costs. Restructuring actions and changes to management commenced late in the first half and were implemented through the second half. Investments made in Catch are being leveraged across the group to provide centralised e-commerce fulfilment capabilities and strengthen digital marketing programs.
According to Wesfarmers managing director, Rob Scott, the results demonstrate the strength of the group’s operating model and quality of the portfolio.
“Financial results were underpinned by strong divisional earnings growth of 12.9% for the year as the group’s businesses continued to respond well to trading and market conditions. The group’s largest divisions performed particularly well with solid earnings in Bunnings and Kmart Group,” he said.
“It was also pleasing to see earnings growth in Officeworks, which is realising the benefits from productivity investments over recent years. While the Catch result was disappointing, investments to date are benefitting group digital and e-commerce initiatives, and actions taken during the year supported progress in the second half.”
For the first seven weeks of the 2024 financial year, sales growth for Kmart Group continued to benefit from strong trading results in Kmart, although growth has moderated from the second half of FY23. Sales growth in Bunnings and Officeworks remained in line with the second half of FY23.