Bunnings, Kmart grow in challenging environment

Figures from one of Australia’s largest retailers show Aussies are still finding room in their budgets to shop despite cost-of-living pressures.

Aussies are shaking off cost-of-living pressures and still visiting Bunnings and Kmart according to the latest half-yearly results from Wesfarmers.

In a statement to the ASX on Thursday, Wesfarmers confirmed strong results from its retail arm, with net profits after tax for the entire operation rising 2.9 per cent to $1.47bn.

The key Bunnings business reported a 3.1 per cent increase in sales to $10.26bn, while Kmart Group sales increased 2 per cent to $6.2bn.

Aussies are still going to Bunnings despite cost-of-living pressures. Picture: NewsWire / Andrew Henshaw

The company’s Officeworks segment recorded a 4.7 per cent lift in sales to $1.75bn. This was driven by above-market growth in technology.

Wesfarmers managing director Rob Scott said the increase in profit in a challenging environment highlighted strong execution across the business.

“During the half, cost of living and cost of doing business pressures continued to significantly impact many households and businesses,” Mr Scott said.

“In this environment, the divisions remained focused on long-term shareholder value creation, investing in even greater value, service and convenience for customers. Proactive efficiency and digitisation initiatives helped mitigate higher costs while enabling divisions to enhance the customer experience.

Wesfarmers managing director Rob Scott said the company was able to increase profits in a challenging environment. Picture: NewsWire / Andrew Henshaw

Earnings were also better at Wesfarmers’ WesCEF chemicals arm, but earnings fell for its industrial and safety division. At the new Wesfarmers Health arm, earnings rose 3.7 per cent to $28m.

Thursday’s results come a month after the retail giant announced the closure of online marketplace Catch.

In a statement at the time, said Catch would have its last day of trading on April 30, 2024.

Wesfarmers said it was shutting down the marketplace business amid spiralling losses, as it faced growing competition from sites such as Temu and Shein.

Catch’s e-commerce fulfilment centres will be transferred to retail brand Kmart Group, with other digital capabilities, including specialist personnel and supplier relationships, to be transferred to other divisions.

The company said about 100 roles would be redeployed but 190 jobs would be lost.

Wesfarmers estimates the wind-down will cost between $50m and $60m.

Catch is expected to report an operating loss of up to $40m for the first half of the 2024-25 financial year.

Mr Scott reiterated on Thursday that Catch’s closing was a net positive for the business.

“The decision is in the best interests of shareholders, as it eliminates the

losses associated with Catch and strengthens the retail divisions’ omnichannel offers,” he said.

Wesfarmers announced an interim dividend of 95c per share, up from 91c, and payable on April 1.