By Claire Reilly
Wesfarmers has today released its yearly results for its group of companies, including Officeworks, Bunnings, Target, Kmart and supermarket chain Coles. Earnings before interest and tax were up across the group, except for Target, while the group’s total net profits after tax were up 10.6 per cent year on year.
Speaking about the company’s results was Wesfarmers’ managing director, Richard Goyder.
“During the year all of our retail businesses worked hard to deliver better value and improved merchandise offers for customers, while investing to renew and grow their store networks and improve supply chains,” said Goyder.
“These initiatives were rewarded with increasing customer numbers and units sold, more than offsetting price deflation impacts, including from our reinvestment in lowering prices.
“The investments made by all our retail businesses in improving their customer offers and service, providing greater value, and investing in store networks and multi-channel capabilities have positioned them well for growth.”
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Group by group
EBIT for the company’s home improvement sector (Bunnings) was up 4.9 per cent, with the retailer opening 16 new shopfronts and closing 5, with a further 10 sites under construction as at the end of June.
Wesfarmers’ office supplies business (Officeworks and Harris Technology) saw a 6.3 per cent increase in EBIT. Officeworks opened six new stores and closed two, while Harris Technology closed two of its four Australian stores.
According to the company, “transaction and unit growth offset heavy price deflation [at Officeworks], particularly in the technology and furniture categories,” while the retailer’s online channel “experienced strong growth”.
Target’s revenue was down 1.2 per cent on 2011, while EBIT was down a significant 12.9 per cent. This was affected by a $40 million “restructuring provision…in respect of a future reconfiguration of its supply chain” according to the company’s results release, as well as “challenging trading conditions during the year, particularly in consumer electronics”.
Finally, revenues at Kmart were up 0.5 per cent year on year, while EBIT increased by 32.3 per cent.
“Revenue was broadly in line with the prior year as Kmart’s strategy to lower prices across the store resulted in higher customer transactions and volumes sold,” the company noted. “Earnings growth was achieved through improved product sourcing and logistics, refinement of Kmart’s core everyday range, and further cost efficiencies.”
Wesfarms also noted the effect of the Federal Government’s household assistance package in improving the financial performance of Target and Kmart.