Australian consumers continue to flock to Kmart and Bunnings, delivering their owner a boost in sales and earnings.
Wesfarmers, which also owns the popular Priceline pharmacy network and Officeworks, has reported a 9.3 per cent rise in first-half net profit to $1.6 billion.
The profit news, which was just above expectations, came after sales increased by 3.1 per cent to $24.5 billion in the six months ended December.
Wesfarmers CEO Rob Scott said the better performance was backed by earnings contributions from Bunnings, Kmart (which includes Target) and WesCEF, its fertilisers, chemicals and energy arm, despite challenging market conditions.
“Despite a modest improvement in consumer demand, higher costs continued to weigh on many households and businesses,” he said in a statement on Thursday.
“The divisions performed well, driving productivity to mitigate cost pressures and keep prices lower for consumers.”
The “everyday low prices” model led by Bunnings and Kmart continued to support sales and earnings, Mr Scott said.
Bunnings had higher sales across all of its products, while Kmart reaped the rewards of the popularity of its in-house Anko range.
“Sales across Kmart group’s brands saw (a) relatively stronger performance in Kmart, partially offset by Target, which was impacted by difficult trading conditions in apparel, particularly in seasonal categories,” Mr Scott said.
Wesfarmers said its retail divisions continued to trade well in the first six weeks of the second half of this financial year.
However, it noted that the start of a new, higher interest rate cycle this month and the uncertain outlook for inflation is affecting consumer sentiment.
The Perth-based group declared an interim dividend of $1.02, up from 95 cents a year ago.
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