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Kmart boss Ian Bailey, who gave a presentation on the Australian business at a US conference in January, said he was in “half a dozen conversations” with US and European retailers about stocking Anko products, but it was “very early days”.
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The discount department store has dropped prices on some 1300 products over the past six months, and said it would keep a focus on reducing its operating costs amid higher inflation, supply-chain costs and staff shortages.
Taking a leaf out of Kmart’s book, Bunnings has also pivoted to focus on private label and affordable product offerings, which resulted in more foot traffic to stores, bigger basket sizes and more items sold in the December half. Its revenues increased 1.7 per cent in the period, with online sales rising 5.1 per cent.
Bunnings’ move to expand its cleaning and pet ranges also won customers eager to save by bulk-buying.
Officeworks’ 1.8 per cent growth in revenue to $1.7 billion in the half was driven by demand for stationery, art and school supplies, and tech products, while sales for office furniture declined.
Scott said the strategy of everyday low pricing at Kmart, Officeworks and Bunnings – rather than the high-low pricing approach of the supermarket giants, which leans on discounts and promotional periods – had resonated with customers, even as they increasingly wait for sales events such as Black Friday.
“Interestingly, we found that our everyday low prices were resonating really well through Black Friday,” Scott said.
Catch.com.au was the most significant drag on Wesfarmers’ result, with revenue slumping nearly 38 per cent as the website slashed unprofitable product lines to focus on higher-demand categories. The online marketplace is expected to be unprofitable for the entire financial year, though losses in the second half are expected to be less than the first half.
WesCEF, the ASX giant’s chemicals, energy and fertiliser business, saw its sales fall by 21 per cent amid volatility in the price of lithium, which has dropped due to oversupply, softer demand from China, and lower US electric vehicle sales.
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Wesfarmers will pay a fully franked interim dividend of 91 cents per share, representing a 3.4 per cent uptick on the same time last year.
Looking at the current half, Wesfarmers said Kmart has “continued to deliver strong sales growth” during January and the first week of February, while Bunnings’ and Officeworks’ sales were “broadly in line” with the same period last year.
MST Marquee senior research analyst Craig Woolford described Kmart’s result as “outstanding” and noted that Wesfarmers’ operating cash flow of $2.9 billion, an uptick of 47 per cent, was “very good”.
“Wesfarmers has delivered a good result driven by cost control and Kmart,” he wrote in a note to clients. However, he noted some weakness in revenue from new Bunnings stores.
Analysts from Jarden said the half-year figures were “another quality result”.
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